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I'll be the first to admit that it is easier to shove a portion of the CBJ's tax load from local taxpayers backs onto the visitor industry. And I'll admit that the industry seems to be an easy political target. However, I believe the issue is not easy political targets, but tax fairness.
As readers of the Empire know, taxes of any type have become the Typhoid Mary of Alaska's political process. Despite the state's current budged deficits, and the looming depletion of the Constitutional Budget Reserve Fund, discussion of passing new taxes has been tepid in the Legislature.
Eroding the Legislature's resolve to tackle the state's budget gap is the September 1999 advisory vote in which a proposed fiscal plan went down by an 83 percent to 17 percent margin. Voters in every precinct in Alaska turned thumbs down on the proposed plan to solve the state's fiscal gap, despite the fact that the plan specifically stated that personal income taxes would not be part of the plan.
In fact, the only hint at future taxes in the plan came in a provision which would have established a task force to "... present options to further reduce state spending and identify appropriate future revenue sources."
Despite the strong anti-tax climate which seems to prevail among Alaska's electorate, Juneau has often taken a different tact by supporting taxes which we targeted for specific governmental functions or projects. Juneau has not been shy about shouldering a tax burden - usually in the form of sales taxes - if it seemed to make sense to do so.
We have passed sales taxes to build a new police station and recreational facilities. We have also voted to up our property taxes if and when the new Juneau High School is built. In general, Juneau's taxation policy has been grounded in fairness and common sense.
However, there is a tax issue perched just over the horizon which will soon test the Assembly's - and to a certain extent this town's - willingness to continue what I believe is tax fairness policy which has worked well in the past.
The issue generally centers on the public policy question of what level of taxation is appropriate for Juneau to impose on the cruise industry, and specifically focuses on the future fate of the tonnage tax. The current tonnage tax was approved by voters in 1990 as a method of paying for cruise-related improvements which were made to the CBJ docks and cruise ship passenger unloading areas.
The tonnage tax expires this year and there is strong momentum among Docks and Harbors Board member to extend it, and there seems to be support at the Assembly level to extend the tax but to target it for specific CBJ waterfront improvement projects. In fact, the Docks and Harbors Board has proposed a $20 million port funding package to an Assembly subcommittee with all of the port improvement projects to be funded with a new tonnage tax.
I think it would be unfair and unwise to impose a new tonnage tax on the industry; here's why.
The CBJ presently collects about $8.76 million in taxes from the industry, in the form of hotel bed taxes, sales taxes paid by visitors to our town, head taxes, dockage fees and property taxes. According to CBJ budget documents, total taxes collected by our local government (excluding user fees and permit charges) amount to about $60 million annually.
That means that the tourism industry presently shoulders about 16 percent of this community's total tax load. It seems to me two issues arise from these tax numbers: 1) wouldn't imposing a new tonnage tax - which would undoubtedly be substantial - border exceeding, or in fact exceed, tax fairness which we have always tried to follow in this town, and 2) an even more important public policy question follows on the heels of the tonnage tax issue, and that is: What is an appropriate level of taxation to impose on the tourism industry?
It is my belief that the Assembly - and members of this community - must address these policy questions before a new tonnage tax is dumped on the industry. I'll be the first to admit that it is easier to shove a portion of the CBJ's tax load from local taxpayers backs onto the visitor industry. And I'll admit that the industry seems to be an easy political target.
However, I believe the issue is not easy political targets, but tax fairness. Is it fair to impose a substantial, new tonnage tax on the industry - especially in light of its current tax load?
I say no; others may take the opposite view.
In any event, its time for the debate to begin.
Reinwand was chief of staff during Gov. Jay Hammond's second term and served in the same position for U.S. Sen. Frank Murkowski in Washington, D.C. He is now a lobbyist and businessman in Juneau who owns a gift shop which caters to cruise ship tourists.