Ketchikan's Sales Tax CapBy Janalee L Minnich Gage
September 17, 2019
The definition of politician is:
To be fair we need to add in what most of us think of politicians these days, per the Webster Dictionary definition:
No one ever runs for public office campaigning to raise taxes, service fees, or Create a hardship on community members. None of us are born politicians, whatever that means. I didn’t go to school in the art of Politics, nor was it ever something I ever thought I would do. Why then you might ask. Why now? Why did you run? I had to think about this for a while because it wasn’t and isn’t what most might think. I am not good at being center stage. As a matter of fact, I have stage fright something fierce, but that is another story. This will shed light on overcoming those fears: our NEED for change. Clearly understanding of how government works outweighs my fear. I realized that if I wanted change, understanding and clarification of where our community is going, I needed to jump in with both feet, and learn, then do my best to make a difference. Here is the thing: I jumped in at the worst possible time in our community’s history, I picked a time when it wasn’t going to be easy sailing. A time when we, as a community, must make critical choices and decisions that will forever impact or haunt us in the future. A time when our community needs to really start taking a hard look at how we do business, or how we avoid doing what needs to be done because we don’t want to piss off our voters. Problem is, as a community we need to talk about responsible rate and tax increases that keep up with the cost of doing business. Several things we must come to terms with are 1. The tax cap has not been raised in 48 years, the last time it was raised was in 1971 and was raised to $1,000.00. The Consumer Price Index Published by the U.S. Bureau of Labor Statistics shows us that from 1978 to 2019 there has been an 292.78% increase in cost of living. The City of Ketchikan has not kept up with the cost of living let alone $1,000.00 is hardly worth today what it was worth in 1978. If we did, our tax cap should be at $3,927.80. Some want to claim raising the tax cap to $2,000.00 will hurt the community members the most. Please ask yourself this: how often do you spend over $1,000 in a single grocery shopping spree, or on stove oil in a single purchase? Some will tell you that raising the tax cap will drive cruise passenger purchases to other communities. These same folks will give you this line, “Ketchikan is already the highest taxed city.” Guess what? It isn’t. That is an untruth or someone hasn’t done their homework. We have been fed this doom and gloom forecast for 20 some years and we have bought into it not only in the tax cap area but in our port fees as well. (that’s a different topic and one I will get to at another time.) As it turns out other coastal Alaska communities have higher single unit sales tax caps Let’s look at our neighbors’ tax cap and rates Juneau: tax 5% Tax cap at $12,000.00. No Cap applies to Jewelry Sitka: tax 6% April to Sept, and 5% from October to March Tax cap $12,000.00 effective 2017. Haines is 4% +1.5% during summer at $10,000.00 Skagway is 5% April to September and 3% from October to March Ketchikan: 6.5% 2.5% borough, 4.0% city, Tax cap goal on the agenda, $2,000.00 raised from $1,000.00 The City Council members have had to make rough strong choices in good faith, and I still believe they all have the best interest of the community at heart. The tax cap would go up on all goods, but would remain capped for rent at the current $1,000.00. We get taxed for our groceries at the amount we spend. Most of us don’t go out and buy our stove oil in one single order. Most of us have a 275 to 300-gallon tank for our houses. To fill up an empty tank we are talking about $700-$800. Most of us are on keep full or like me, you order $200.00 a month to maintain our budget. Some will ask “what about those who fill up their boats to go fishing?” Sure, I had that conversation with a couple local fishermen. Let’s say you have a boat that holds 150 gallons of fuel, that’s about give or take $320.00 so they might spend about $300 to fill up. Keep in mind: if we look at raising property tax the boroughs property tax is already designated to the school district and cannot be used anywhere else. The city property tax is a drop in the bucket compared to the amount of sales tax we collect in the summer compared to the amount collected in the winter. Lets take a look at property tax for the 2018, with a Millage rate of 6.6 we collected $5,622,812.00. currently in 2019 we have tax revenue of $5,695,901.00. Who is paying more in sales tax? Well let’s see! If we look at October to March Sales tax in 2018, $3,807,587.00 was collected. April to September 2018 taxes collected were $8,663,093.00. The majority of the taxes collected are during our tour season. In 2015 collected taxes for October to March at $3,707,060.00 compared to April to September at $7,725,959.00 The difference is $937,134.00 in three years. Imagine if we had kept up with the Consumer Price Index and our cap was at the $3,927.80? Since we don’t have a record of sales over the $1,000.00 mark to see what we are missing out on in revenue we can only guess. But would it not be safe to say that if we looked at raising our tax cap, we could be capturing more revenue from the sales generated by jewelry store sales in the tourist industry?
Editor's Note:
Received September 14, 2019 - Published September 17, 2019 Related Viewpoint: Viewpoints - Opinion Letters:
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