The Haines Borough administration is standing its ground on a decision to hold Canada-based company Dimok Timber to the same sales tax requirements as local businesses.
Dimok stopped delivering wood to Haines after the borough demanded the company remit sales tax and obtain a business license. Company owner John Clunies-Ross appealed to manager Bill Seward, asking him to reconsider the municipality’s stance on his business.
After consulting with the borough attorney, Seward responded to Clunies-Ross and reiterated the position that Dimok is making retail sales within the borough and must collect sales tax from its customers and remit it to the borough.
“Dimok’s use of its own trucks driven by Dimok employees means Dimok maintains distribution of its products within the borough. The Dimok employees driving Dimok’s trucks are representatives of Dimok,” Seward wrote, summarizing the attorney’s opinion.
In his response to Clunies-Ross, Seward objected to the owner’s assertion that the borough was “harassing” residents or “restricting” their access to firewood by making Dimok pay sales tax. Seward also challenged the claim that requiring the collection of borough sales tax would make Dimok’s product non-competitive.
“I believe your customers recognize their obligation to pay borough taxes to fund services provided to them by the borough such as police protection, fire protection and education. The administrative burden to Dimok consists of a few extra key punches on a calculator each time an invoice is prepared and an extra column or two tracking collected borough sales tax on a spread sheet,” Seward wrote.
The borough can’t apply its sales tax ordinance based on whether a business is willing to comply with the law or not, or whether complying with the law makes the business competitive or not, he said.
“I sincerely hope Dimok will thoughtfully weigh the burdens of collecting sales tax from your customers against the benefits of continuing to sell firewood to borough residents and conclude it makes sense to continue to sell firewood in Haines,” Seward closed.
Former customers of Dimok have continued asking the borough administration and assembly members to reconsider their position. Resident Steve Virg-In said the borough should “work diligently to restore and cultivate a relationship with this foreign corporation that has been ostracized.”
“I also do not believe this will stand legal scrutiny of the State of Alaska or the federal government, which will have to be the next step if we are unable to resolve this amicably,” Virg-In said.