Assembly revamps tax exemptions

City OKs sales tax break on heating oil between Jan. 1 and March 31

Posted: Tuesday, November 22, 2005

Non-residents will have to start paying sales tax in Juneau, while businesses can enjoy a bigger tax break next year.

The Juneau Assembly reviewed and voted Monday on about a dozen ordinances that eliminate existing sales tax exemptions on items from newspapers to video games.

The group also approved a temporary sales tax break on heating oil that will be in effect from Jan. 1 to March 31. The loss in city revenue for the heating oil tax is expected to be $440,000.

Last month, a subcommittee from the city's finance committee looked at a number of property assessments and sales tax issues and recommended several changes.

In 1985, the city adopted a sales tax exemption for nonresidents to promote Juneau as a shopping hub in Southeast Alaska. By mail, nonresidents could acquire a $20 exemption card from the city. About 1,100 to 1,200 cards were issued each year, eliminating about $240,000 in sales tax revenue.

City manager Rod Swope recommended dropping the cards because only a small portion of non-residents shopping in Juneau use them. Merchants would not be hurt if the exemption was eliminated, he said.

"The great majority of nonresidents shopping in Juneau would continue to do so without this exemption," he said in his notes.

Representatives from the local auto sales industry objected to the motion. About 20 percent of Capital Chevrolet's business comes from people living out of town, sales manager Mike Chrisman said.

He fears taking the exemption away could steer nonresident customers to Anchorage, Canada or the Lower 48.

"What puts us on a level playing field with them is the nonresident sales tax," he said. Business owner David Summers said it would hurt all businesses that sell large items in Juneau.

But Assembly member Jeff Bush said the argument can be made that it's unfair to make Juneau residents pay taxes that nonresidents don't.

The business community claimed a small victory with the Assembly, which raised the dollar amount of personal property exempt from taxes from $2,000 to $20,000.

Assembly member Merrill Sanford offered an amendment that will increase that amount by $20,000 each year until 2009, when the Assembly will review it again.

The Juneau Chamber of Commerce lobbied to increase the taxable amount to $100,000 so those in the construction industry and others with costly equipment would not have to pay taxes on some of their property.

"If you have to pay more taxes, you may not be able to afford to put that money into more business or jobs," Juneau Chamber of Commerce president Linda Thomas said.

The ordinance passed 8-1, with Assembly member Bob Doll dissenting. Bush asked for the ordinance to be reconsidered at next Monday's special meeting and the Assembly agreed to do so.

The exemption on heating oil taxes narrowly squeaked through with a vote of 5-4. Many panel members thought it was a bad idea to introduce the ordinance after many residents had already bought fuel for the winter.

Doll said some residents were not buying as much fuel, in anticipation of getting the tax break in a few weeks.

An even more controversial issue, the community-purpose property tax exemption, was deferred to a special Assembly meeting Nov. 28. Certain nonprofits in Juneau receive this tax break because they provide community services, such as education.

The city wants to stop exempting certain nonprofits from property taxes and let the state decide if these groups should be exempt. By exercising the city's option to exempt its own nonprofits, the city becomes responsible for paying mandatory taxes on that property to the state, equal to 4 mills.

Nonprofits that have enjoyed the exemption, such as the Perseverance Theater, Juneau Gun Club and Filipino Community Inc., may have to pay the property tax if the city passes the ordinance.

A proposal to eliminate a sales tax exemption given to seniors was not introduced at the meeting. Assembly members are not expected to take that issue up until next year.

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