Anchorage seeks to take tax burden off homeowners

Posted: Thursday, July 26, 2007

ANCHORAGE - Anchorage city leaders are considering an overhaul of local taxes to shift some of the heavy tax burden away from property owners and onto businesses.

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Mayor Mark Begich and Assembly Chairman Dan Coffey said Tuesday the aim is to cut local property taxes by one-third, with new taxes on businesses making up the difference.

Begich said he hopes the new tax system could be in place as early as next year. The Assembly can adopt the tax without voter approval, he said.

Officials are eyeing something called a gross-receipts tax on businesses. Other cities and states have already turned to a gross-receipts tax, which is based on how much money a business takes in. Businesses typically are taxed whether or not they actually make money.

Begich and Coffey said it's up to a task force, headed by former Assemblyman Bob Bell, to decide if a gross-receipts tax or some alternative could be written fairly for local businesses. They said any money collected by the new taxes would be used to reduce property taxes.

Because Anchorage is the state's economic center, with businesses selling goods and services to people from elsewhere in Alaska as well as to tourists, such a tax would be paid in part by residents of other cities.

Some cities and states like gross-receipts taxes because they can produce large amounts of money and are more stable than income taxes. Critics say such taxes target certain businesses - such as those that sell a lot of products but have a slim profit margin - more than others.

Fairbanks recently considered a gross-receipts tax too, drawing complaints from some local businesses.

"It's just too blunt of a weapon, and it'll drive business out of Anchorage, and that was our fear here in Fairbanks," business consultant Jon Cook said.



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