Finance panel OKs business tax break

Juneau boat, aircraft owners to pay more under tax proposal

Posted: Thursday, October 27, 2005

The Juneau Assembly's Finance Committee on Wednesday advanced proposals that would give businesses some relief on personal property taxes, though boat and aircraft owners should prepare to pay more to the city.

The committee is revising its policy on property and sales taxes, and the proposed ordinances aimed at businesses and boat and aircraft owners are on a list of changes for the near future.

The proposals will be drafted into ordinances and introduced to the Assembly next month.

The panel is also considering dropping sales taxes on video gaming devices, direct sales of newspapers by carriers, purchases and sales to nonprofit organizations and lobbying services, among a few others.

The committee decided to break up the proposals into several ordinances.

The business community has lobbied the city for more than a year to raise the dollar amount of personal property that is exempt from taxes.

Currently, any property that is not inventory - from copy machines to dump trucks - and is valued at more than $2,000 is taxed once a year with a mill rate of 11.17.

A tax policy subcommittee recommended that the $2,000 limit be raised to $20,000. An owner of a $50,000 loader backhoe would then subtract the $20,000 exemption and pay a tax of about $335.

"I really can't be angry with that," said Art Sutch, owner of a downtown digital photography store. He added that an increase to $50,000 or more might be better for other businesses.

The Juneau Chamber of Commerce is pushing for a $100,000 exemption, saying the revision does little to help independent and small businesses in the construction industry paying taxes on their monster vehicles.

"I think $20,000 is a token gesture," said David Summers, outgoing chamber president. It is not enough to be an incentive to encourage small business activity, he said.

With Juneau's high cost of living, more tax relief should be considered, he said.

The business personal property tax contributes $2.2 million to the general fund and the city collects $35.7 million of property taxes annually, mostly from real estate, city Finance Director Craig Duncan said.

"It's nice to give people a break," Assessor Jim Canary said. "But you pass the tax burden on to others."

The Assembly will also vote on flat property taxes for boats and aircraft equal to four mills. The estimated yearly fees are about $240 for aircraft, about $450 for commercial vessels and $75 for noncommercial boats.

Aircraft and boat owners currently do not pay property taxes.

The city would hire a part-time employee to assist the appraiser's office.

A city memo said taxpayers who do not own boats and aircraft are subsidizing the individuals who do own these "optionally exempted properties" with the state's required local education funding.

John Stone, city port director, said the tax could be "the nail in the coffin" for some fishermen deciding whether to stay in Juneau.

Kathy Hansen, executive director of the Southeast Alaska Fishermen's Alliance, agrees it could be the last straw for her and her husband. She thinks fishermen and boat owners pay enough in this town.

Locals already pay the most expensive moorage fees in Southeast Alaska - $1,500 a year. In comparison, Sitkans pay $500 moorage fees and about $100 in property taxes, depending on the length of the boat

• Andrew Petty can be reached at andrew.petty@juneauempire.com



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