My turn: Now not time to drop tax break

Eliminating Juneau's senior sales tax exemption would hurt the city's economy

Posted: Wednesday, April 12, 2006

The Juneau Assembly should not eliminate the senior citizen sales tax exemption.

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Fiscally, it not the correct action. Not yet, anyway. Juneau cruise ship visitors this year are estimated at 922,449, 1 percent above 2005. All of their spending (estimated at $171,576 by the McDowell Group), is subject to Juneau sales tax. With the Juneau head tax, projected city revenue from this source is $13.9 million, a very large amount. These figures do not include the spending of 72,000 visitors expected to arrive by air. Then there is sales tax revenue from legislative visitors and, of course, year-round Juneau residents. And there is still more revenue.

Assessed valuation of property for city taxes continues a dramatic rise. My assessed valuation for 2006 rose 18 percent, and over four years, its rise is 48 percent. This amount seemed extreme until I learned from a dozen neighbors that their rise was 24 to 26 percent, and over a four- and five-year period, 50 and 51 percent, with one at 60 percent. This apparent areawide rise reflects national dynamics that show no sign of slowing and certainly not of decreasing anytime soon. The rich, middle class, retirees, seniors, all of them if they own property, pay a very high share of city taxes.

The financial sky is not falling. Juneau's libraries are not having to close or reduce their hours; Perseverance Theatre and Eaglecrest Ski Area subsidies, which add to Juneau's quality of life, are not proposed for elimination. The city, like the state, currently enjoys a budget surplus. Further, city revenue streams are not just stable but increasing. As of July 1, Alaska visitors here who are not age 65 are required to pay Juneau sales tax. With Wal-Mart and Home Depot soon to open in Juneau, assessed valuation of those large plants will produce another substantive, stable increase in city tax revenue. There is no immediate nor apparent intermediate need to take away the relatively small but meaningful sales tax exemption for Alaskans age 65 and older.

Elimination of the senior sales tax exemption will hurt the Juneau economy. Currently, Internet purchasing has no sales tax here, and many online businesses offer free shipping. Also, online prices are 10 to 15 percent less than for the same items in Juneau. Economically, the exemption is an incentive to participate in the local economy but a disincentive if eliminated.

So taking away the exemption suddenly is not needed nor correct. Neither is it right. Intentional or not, elimination is a gross sign of disrespect for seniors and of something worse, indifference to need. The exemption is not a handout. It is not a subsidy. It is not "welfare." It is a reprieve from a tax paid for 40 to 60 years. Now that their income is fixed and diminishing at an inflation rate of about 3 percent a year, this reprieve is very meaningful. In planning retirement finances, people included this exemption. Suddenly taking it away breaks a community promise because it lacks fair notice to those receiving it and those retired and in expectation of it. For most of these people, there is no going back to employment or to adjusting retirement finances.

The Assembly should not eliminate the exemption. If it must, then it should make it gradual with "grandparenting" and over reasonable time for qualification (10 years, five years, two years?). To eliminate the exemption suddenly is neither correct nor right. When including those who must count pennies to buy food, and even have to put back a piece of cheese because it cannot be afforded, elimination is not just disrespectful and dishonorable but mean and cruel.

There is a correct, right, responsible and respectful route to addressing this issue. It is hoped the Assembly has the character and patience to find and follow that route. The character and future of our community depend on it, for as history and literature show, character is destiny.

• Art Petersen is a Juneau resident who retired from the University of Alaska Southeast in June 2004.

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