Chambers renews push for food tax exemption

Assembly member says Juneau shouldn't make money on basic needs

Posted: Monday, December 29, 2008

Juneau Assembly member Sara Chambers wants to revive a push to exempt basic food items from sales tax.

"That's the big goal, especially with the economy the way it is, the uncertainty right now, aside from just the principle of it. I don't think we should be trying to make revenue off of some of the basic things that people need to survive," Chambers said Friday.

Chambers raised the exemption at an Assembly meeting in September, but went on maternity leave and missed meetings in November and December where the topic would have been followed up. Since September, the Assembly has had no further substantive discussion of the exemption.

Policy analysts have argued that sales taxes on basic groceries are unfair because they disproportionately burden low-income households. The presumption is that the lower one's income, the higher the ratio spent on necessities such as groceries. It's a textbook example of a regressive tax.

The majority of states exempt basic groceries from sales taxes, levy reduced sales taxes or offer credits or rebates to make up for sales taxes paid on food, according to a 2007 report from the Center on Budget and Policy Priorities, a nonprofit think tank based in Washington, D.C. Only Alabama and Mississippi fully tax food without any offsets.

The state of Alaska doesn't levy sales tax, so this is a local government issue for Juneau.

Chambers, who will officially be back from maternity leave today, initially asked the Assembly to create a task force to study effects of a food tax exemption. Several veteran Assembly members said a previous task force had already examined city sales taxes at length and suggested revisiting those findings rather than starting anew.

Friday, Chambers sounded amenable.

"I don't want to spend a lot of time just sitting around in a task force and getting through 2009 without any measurable action," Chambers said.

There's a number of details and practical questions that must be settled before a formal proposal can be drafted, but the key questions now are, what would the exemption cost the city and how can that loss be made up? Chambers said she may be willing to cut services to cover the exemption.

A 1998 study by the Center on Budget and Policy Priorities may offer a rough picture of what's to be expected. The study examined sales taxes on food state by state and determined initial losses ranging from 5 to 30 percent in states that enacted a food exemption.

Much of Juneau's $40 million-plus annual sales tax base comes from tourists, suggesting the effect here would be on the lower end of the range.

"I don't really expect a tourist to walk into a grocery store and buy a gallon of milk," Chambers said.

The Assembly's next meeting is Jan. 12.

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