Voters will be deciding on changes to Petersburg’s sales tax exemptions this October. However, the borough assembly Monday voted to scale back the changes before sending them to the local ballot.
Voters will have two separate questions on sales tax exemptions this fall. One seeks to raise the cap on that tax. Currently customers only pay the borough’s six percent tax on the first 1200 dollars of a purchase, or no more than 72 dollars tax on a large item or service. The assembly this spring has been talking about increasing that to 5000 dollars, which would have meant tax revenue of up to 300 dollars on a large purchase.
On a radio call in show, borough manager Steve Giesbrecht explained that the tax changes were needed to offset potential losses of federal funding and a growing senior population.
“Well you either raise revenue or you cut services,” Giesbrecht explained. “Well Petersburg’s one of those places where no one really wants to up and say cut my services. And so we’ve moved towards the where are the revenue sources. Currently that’s been focused on exemptions. You have the senior exemption which is the really big one in the room that’s not being discussed at this time. And these are two other sales tax exemptions that are commonly either higher or don’t exist in some other communities.”
Sales tax money makes up a little less than one third of the borough’s more than nine million dollar general fund budget. The borough has looked into scaling back or eliminating exemptions with varying degrees of success. Voters said no to raising the tax cap to $2000 in 2014 and $1700 in 2012, but approved an increase to the current level of 1200 dollars back in 2002.
Bob Lynn proposed the exemption changes this year after working on the issue with borough staff. This week he explained testimony on the proposals convinced him to reduce the proposed size of the tax cap change. He proposed an amendment to raise the tax cap only to 1500 dollars instead of 5000.
“Listening to everybody, I think that’s much, it’s reasonable to make that change,” Lynn said.
A 1500 dollar cap would mean the most the borough would collect on a large sale would be 90 dollars. Others on the assembly, opposed to the 5000 dollar level, thought the $1500 cap had a better chance of getting voter approval. That amendment passed 6-0 with Eric Castro not at the meeting.
The other proposed exemption change was also revamped in the third reading of the ordinance to send it to the ballot. The original proposal was to get rid of an exemption for non-residents who purchase goods or services here and have them shipped out of town. Lynn proposed limiting that. He wanted to still allow a tax exemption for non-residents ordering those things by mail, phone or online. That means the exemption would go away for non-residents making those purchases only in person here in Petersburg and having them shipped out.
“After we’ve looked at it that would take care of a majority of the comments we’ve received that this was really going to affect business in town,” Lynn said. “It doesn’t take care of all of them but it takes care of I would say 70-80 percent of the comments we received. And so the language you have in front of you then would allow those sales to go tax free.”
Local businesses opposed both tax exemption changes going on the ballot. The second change proposed by Lynn also received unanimous assembly support and the assembly voted 6-0 to put those scaled back exemption changes on the October ballot.