A committee reviewing Petersburg’s sales tax law was not too interested last week in raising the 12-hundred dollar tax cap for local purchases. That committee is trying to come up with recommendations for increasing or keeping stable sales tax revenue for the borough. A discussion in January could generate a little more debate, as that group plans to review the local exemption for senior citizens. Joe Viechnicki reports.
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Petersburg’s sales tax cap is 12-hundred dollars. Customers pay a six percent sales tax on purchases up to, but not beyond, that amount. That means for large purchases, the most the borough collects is 72 dollars.
It’s the same cap for Wrangell. Sitka’s is $1,500 while Ketchikan is at $1,000 and Juneau is at $7,500.

At a meeting last Tuesday, Committee member Nancy Strand was interested in an increase. “I say let’s raise it, let’s recommend raising it,” Strand said. When asked what the cap should be, she replied that $7,500 sounded good. Others on the committee were opposed to that increase and thought it would be passed by local voters.

A ballot question to raise the cap from $1,200 to $1,700 failed last year but the margin was only six votes. Voters agreed to raise the cap in 2002 from $1,000 to the current level of $1,200.

Committee member Fran Jones wanted to leave the cap where it is. “We’re more competitive with these other small communities if we just stay where we’re at. I feel like if we raise it we’re gonna shoot ourselves in the foot.”

Others on the committee agreed with Jones and did not want to recommend a cap increase. Finance director Jody Tow pointed out some looming impacts to borough finances. One was a plan to move more of the state raw fish tax revenue from the borough’s general fund to the harbor department. Another was the increasing portion of Petersburg’s population over the age of 65, that will qualify for a sales tax exemption. “Well and I just wanna point out too that the seniors are getting older so there’s going to be more exemptions,” Tow said. “Those are gonna increase. And the point of the sales tax committee is to keep sales tax level. So what are you proposing to do to even that out?

Instead of focusing on the overall $1,200 cap, Jones was more interested in looking at a different exemption in the code. That sets a $1,200 cap for items purchased in one store over a 24-hour period. “Instead of holding a slip for a 24-hour period for all the crew to come in at different times of the day and buy gear and boots and rain gear, whatever, and then just keep adding it on, have the businesses ring it through as they purchase and collect the sales tax on it,” Jones said. “That was one of the things I never did like and that was created because they were getting around it by holding the slip , the charge slip.”

Committee chair Sue Flint responded that businesses could only hold a charge slip for 24-hours. Committee members wanted to hear more input about removing that exemption and held off on making a recommendation.

The committee will tackle the senior tax exemption at a meeting in early January. That meeting is planned for January 3rd in borough assembly chambers.