Sales Tax exemptions under review
The Sales Tax Ordinance Review Committee will be reviewing exemptions outlined in the tax code during the next several months. The group also outlined its mission statement during the meeting. It states, “…to simplify the code and collection procedures, and to generate an equal or greater amount of revenue so the Borough does not have to decrease services or increase property taxes.”
Anne Hurt, Finance Clerk for the Petersburg Borough, went through 26 exemptions and made suggestions as to which ones could stay and those that could be removed.
“I just think going forward that you all would be, I think advised, to look at every exemption and see if it needs to stand or not,” Hurt said.
Sales tax associated with purchases on pull-tabs, purchases totaling more than $1,200, wharfage charges, child day care and sales to non-profits are a few of the exemptions the committee will review.
Working with vendors with how to police what is exempt or not at the point of sale was also discussed. It was pointed out by several committee members that some purchasers abuse the re-sale tax exemption when they buy personal items and claim those items as re-sale.
The senior sales tax exemption is one that was discussed on Tuesday’s meeting. The 463 seniors who use the exemption card cumulatively saved around $250,000 last year in sales tax exemptions.
The ordinance committee reviewed population projections during Tuesday’s meeting. According to the Alaska Department of Labor, Research and Analysis, the projected population for the region will decrease by around 20 percent during the next 20 years. And residents more than 65 years old will encompass roughly a third of the total population by 2035.
Those estimates encompass the Petersburg Census Area that includes the borough, Kake and Port Alexander.
“Since we’re the majority of that population group they (data) might be skewed a little bit but overall we’re going to dominate what happens,” said Liz Cabrera, Coordinator for the Petersburg Economic Development Council.
The committee also discussed Petersburg Medical Clinic’s recent funding request for capital projects. In order to avoid raising property taxes to pay for it, committee member Sue Flint mentioned taxing cigarettes as a possible funding source for the hospital. She went to a store in Petersburg to get a sense of how many packs it sold in a month.
“This one store sold 16,000 packs in the month of August,” Flint said. “One month, one store.”
Flint said the possibility of instituting a cigarette tax might be discussed in more detail in the future.
For now the committee still needs to address each exemption within the context of the sales tax ordinance as a whole.
Its next meeting date has been set for October 29 at noon in the assembly chambers. The committee will further discuss the ordinance during that meeting and will discuss each exemption on a case-by-case basis during subsequent meetings.
The ordinance committee hopes to present its recommendations to the borough assembly by March and any changes will be on the ballot for voter approval in October 2014.
The sales tax ordinance and the list of exemptions is available to review and download on the Petersburg Borough website.