The City and Borough of Juneau Assembly Finance Committee met to review several tax matters at its meeting Wednesday.
The first was the $7,500 sales tax cap exemption administered for single-item tangible goods. There is an exemption for fuel oil delivered by marine transportation to a single customer and a similar one for services, such as rebuilding a major piece of equipment.
The exemption categories are real property sales, transportation equipment, industrial equipment and fuel, vehicles, electronics and jewelry.
A proposal was previously submitted to the City Assembly to eliminate jewelry from the exemption. There were $3,556,345 in 2010 jewelry sales exemptions. The largest spike was in 2004, which was $2,346,545 compared to the previous year’s $65,435.
The committee decided to maintain the exemptions as is at this time.
The committee also reviewed the city’s property tax regulations regarding delinquency and penalty rates. This review came in response to recent testimony from a taxpayer who was penalized for a late sales tax filing.
Property tax rules dictate that if general taxes are not paid on or before the due date of Sept. 30, then a 5 percent penalty of due taxes shall be added on Oct. 1. An additional 10 percent shall be added on March 1.
The law also dictates that 15 percent interest shall accrue on unpaid taxes, not including penalty, until paid in full.
For sales taxes, $25 is added to late returns, plus a 5 percent monthly late penalty of the unpaid balance until a 25 percent total penalty has accrued. The annual interest rate on delinquent tax is 5 percent per year above the prime rate, rounded to the nearest full percentage point. However this interest rate remains within 10 and 15 percent per year, should the calculated rate reach outside those parameters.
No adjustments were made Wednesday night, but the committee will hear future recommendations.
City Manager Rod Swope also gave a list of proposed marine passenger fee uses for fiscal year 2012. He said these recommendations are nearly identical to those made in the last few years with the exception of recommending large amounts to private dock projects. For example, the list recommends $536,372 for the Waterfront Seawalk and $400,000 for maintenance of the AJ Juneau Dock.
In looking at future state revenue impacts, the committee discussed the state oil pipeline’s production will decline to the point where it will not be feasible to continue pumping oil by 2017 or 2018. It was stated that this will negatively impact local revenue sharing and low interest loan and grant availability because nearly 90 percent of Alaska’s economy is generated from oil production on the North Slope. Other adverse effects could include possible increase in local government required contributions to PERS and the decline of government jobs, property values, property taxes, sales tax revenues, local population and tax base.
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