November 7, 2013 | Vol. 39, No. 45

Sales tax committee begins individual exemption review

The sales tax ordinance review committee met last Wednesday and discussed the challenges of interpreting language in the code.

The review committee’s mission is 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.

Jody Tow, Borough Finance Director, brought up a section of the ordinance dealing with how to define non-profits and the exemptions they receive.

According to the ordinance, qualified nonprofits that are exempt from sales tax are “…any organization formed exclusively for religious, educational or charitable purposes that has received an IRS nonprofit designation…”

Tow brought a list of 28 active nonprofits operating in Petersburg and questioned whether organizations like the Viking Swim Club or Operation Graduation fit into the scope of the definition.

“It’s hard to broaden the language without becoming so inclusive without opening a can of worms,” committee member Lee Corrao said.

Committee member Fran Jones said the city of Petersburg created the ordinance many years ago.

“The pastoral community came to the city and requested a sales exemption and that opened the door for other nonprofits to request the same consideration,” Jones said.

The committee ultimately decided to leave the definition alone agreeing that attempting to include some and exclude others would create more problems than it would solve.

The committee then moved on to discussing individual exemptions.

“Casual and isolated sales not made in the regular course of business,” was an exemption the committee worked to define and question.

They questioned whether vendors at festivals around town throughout the year are making isolated sales or are licensed businesses that are claiming exemptions.

A more controversial exemption under review is the $1200 sales tax cap. If someone purchases goods, like fishermen buying large amounts of fuel, with costs more than $1200 they don’t have to pay sales tax.

Committee members Jones and Nancy Strand think the tax cap should be done away with.

Susan Flint said eliminating the tax cap would likely hurt local businesses.

“You’ll cut off your nose to spite your face because people will do business elsewhere,” Flint said.

Member John Murgas recommended they solicit businesses that would be affected to make comments during future meetings.

The senior citizen tax exemption is also under review.

The committee will discuss further exemptions at its next meeting on November 26 at 12 p.m.

After it has finished reviewing the ordinance, the committee will make its recommendations to the borough assembly where it will approve the final ordinance and ultimately pass it on for voter approval if there is a proposal to change the sales tax rate or other exemptions.

The public is invited to attend and comment as meetings progress.

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