Tax-free food on agenda

Posted: Wednesday, September 10, 2008

The Juneau Assembly will consider a member's request to put a stop to taxing food.

Assembly member Sara Chambers wants to form a task force to investigate details such as which foods would be exempt from the city's 5 percent tax, how merchants would ring up sales and how it would financially affect the city.

Chambers was motivated to cut the food tax when the Assembly last month approved $500,000 in sales tax reserves to start the casting of a life-sized bronze whale sculpture planned for the downtown waterfront. The decision was overturned on Monday.

Chambers called for government belt-tightening in the wake of the national economic downturn and skyrocketing food and fuel prices, saying she would "stand up for the little guy" trying to make ends meet.

The Assembly will discuss the idea tonight at a meeting that begins at 5 p.m. in City Hall.

The city generates $42.5 million a year in revenue through a general sales tax on goods, services and rentals.

About half of the money is spent on capital projects and half is used for government operations such as payroll and street plowing.

Elected officials looked into tax exemptions in 2005 and determined the food tax generates $4 million to $5 million in revenue for the city, Mayor Bruce Botelho said.

The city would have to figure out how to make up the revenue, he said.

Another challenge involves details about which foods might be taxed.

Whether food such as prepared deli or restaurant meals are exempt makes a difference in how merchants ring up sales, and ultimately affects the financial impact to the city, Finance Director Craig Duncan said.

A simple definition allows only foods that qualify for food stamps to be exempt, since merchants already are required to exempt those items from taxes.

Residents in 1994 rejected a similar idea when they were asked to approve a 1 percent increase in the general sales tax while exempting basic food, residential electricity, heating fuel, garbage collection, water and sewer taxes. Sales tax at the time was 4 percent.

It failed by roughly 2-1.

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