A committee taking another look at Petersburg’s sales tax code is starting to get into the list of sales, organizations and individuals that DO NOT have to pay sales tax to the local government. The committee plans to look at each local sales tax exemption during meetings this fall and winter and hopes to make recommendations on possible changes to the borough assembly next spring.
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The committee is looking to simplify sales tax code and find ways to either increase or keep stable the amount of money the local tax generates for Petersburg’s borough government. Before getting to a long list of exemptions, the committee this week reviewed definitions in the code – including the definition of a non-profit organization that does not have to pay sales tax on local purchases.
Borough finance director Jody Tow said that issue was a hot topic in her office. “Everyone thinks that if they’re non-profit that they should be exempt from sales tax,” Tow said. “But you actually have to, according to our definition you have to be a 501c3 or 501c4. But not only that, you also have to be formed exclusively for religious, educational or charitable purposes. So, churches, yeah no problem. School, no problem. Salvation Army, no problem. But then you have people like the WAVE, are they charitable? How do they fit in? Are they considered non-profit?”
Besides the domestic violence victims advocacy group Working Against Violence for Everyone (WAVE), Tow mentioned groups like the Mitkof Dance Troupe, Viking Swim Club, KFSK public radio, Clausen Museum, Operation Graduation and others. Tow’s office gives out sales tax exemption cards to the groups and she said it’s up to borough staff to interpret whether the groups are covered by the exemption.
Committee member Fran Jones, who used to work for the city government, provided some of the history behind the definition language. “The pastoral community came to the city and requested that they receive a sales exemption. That opened the door for other non-profits to request the same consideration. However, the city felt it should be limited to charitable or religious organizations, and education, yeah, I think, yeah, those are the three.”
Others on the committee struggled with making a distinction between which groups fit the definition and which did not. “Do you think Operation Graduation? I mean I wanna give it to them cause its school,” Tow said.
“It is by extension education because, everyone participating has been a student and it’s limited to graduating students, so you could,”Corrao responded.
“These are my problems and I usually go to the city manager and say you make the call because I’m not doing it,” Tow responded.
Ultimately the committee did not propose any changes to the definition language and thought staff should continue making the determination on which groups qualify.
“As awkward as it may feel for you, I’m not sure that we really can bring an improvement to the situation,” Corrao said.
The committee also looked over other definitions but came up with no recommended changes. “I think in any ordinance there’s no way we’re gonna get it exactly defined, what is and what is not. But when I read through our ordinance what impresses me is it has a lot of compassion and empathy and that kinda shows and we just have to go with the negatives that there’s going to be some difficult interpretation sometimes but I think it’s working,” said John Murgas.
Tax code allows for 24 exemptions from sales tax for everything ranging from salaries and wages, to insurance, prescription drugs and air charters and many purchases. Some of those are required under state or federal law. The committee started to delve into the list of and will continue that discussion next month. The committee’s next meeting is November 26th. Review of the tax code exemption for people 65 and older, will likely take up a whole meeting sometime in early 2014.
