Borough assembly advances sales tax code changes
Despite some talk of changes, the Petersburg Borough Assembly again voted during Monday’s meeting to pass six ballot measures that change the borough’s sales tax code.
Four of the changes involve the senior sales tax exemption, which exempts individuals more than 65 years old from paying the borough’s six percent sales tax.
One measure would establish a sunset date, December 31, 2019, when the exemption card would no longer be issued. However, those who already receive the exemption would continue to do so.
The sunset date ordinance failed during Monday’s meeting on its second reading, but assembly member John Havrilek, although present by teleconference, wasn’t able to be heard by the assembly due to a technical issue. Because he would have voted for establishing a sunset date, the assembly later voted unanimously to reconsider the ordinance in a second and third reading during the next meeting.
Assembly members Cindi Lagoudakis and Bob Lynn voted against establishing a sunset date, but the rest of the changes were unanimous.
“It (the sunset date) sets up two classes of people and a very arbitrary date, and that to me doesn’t seem entirely fair, so I will not be voting for it,” Lagoudakis said.
Assembly member Jeigh Stanton Gregor said, although he wouldn’t be personally voting for some of the ordinances on the ballot, he will vote for them all to appear on the ballot so community members can decide for themselves.
Assembly member Nancy Strand echoed his sentiments.
“I don’t want to disenfranchise my constituency by not allowing them to vote on these,” Strand said.
A second change would limit the senior exemption to borough residents only.
A third would require proof of one year of residency in the form of permanent fund dividend applications.
A fourth change would limit the senior sales tax exemption to groceries and residential heating fuel only.
Some proponents of the changes cite an increasing senior population as a reason to limit its accessibility and use.
According to borough data, seniors collectively saved around $267,000 in exemptions in 2012 compared to $180,000 five years ago—a 48 percent increase while overall sales, before exemptions, increased by 17 percent.
During Monday's meeting, Borough Manager Steve Giesbrecht cited Alaska Department of Labor statistics that project a senior population increase in Petersburg from 13 percent to 27 percent by 2027.
Another change involves increasing the sales tax cap to $2,000. Currently, consumers don’t pay sales tax above $1,200 worth of purchases. Assembly member Kurt Wohlhueter voted to amend the ordinance and increase the cap to only $1,500, the sales tax review committee’s recommendation, but that amendment failed and the change to $2,000 stuck.
The final proposed change to the sales tax code would impose a tobacco tax. A wholesale excise tax of $2 per pack of cigarettes and 45 percent of the wholesale price on other tobacco products, including electronic cigarettes, would be implemented.
The assembly will vote a final time on the ordinances during its first meeting in August.