The Haines Borough may require non-profit organizations to purchase an annual $25 sales tax-exempt card following a recommendation from the assembly’s Finance Committee.

Currently, 80 non-profits are exempt from paying local sales tax. Committee member Tom Morphet thinks tax-exempt cards would help recoup some of those losses. Morphet initially proposed a $50 annual card.

“That would raise $4,000 a year, which is not a lot, but I think we have to do something to stanch this increase in these out of town non-profits coming here and not paying any sales tax.”

Alaska Mountain Guides owner Sean Gaffney raised concerns about losing non-profits who wouldn’t want to pay for a tax-exempt card, particularly Boy Scout troops from the Lower 48.

Gaffney said 10 to 15 troops buy tours from his company each year and pour large amounts of outside cash into the Haines economy – an amount he estimated at $300,000 annually.

“They do, as federally exempt organizations, expect that as a part of coming they’re going to receive the types of preference that they receive in other parts of the country,” Gaffney said. “I am saying they will not come here. What percentage of them will we lose I can’t tell you.”

Gaffney stressed the value of that money recirculating in the local economy and estimated Boy Scout money is spent three times around the community, a claim he said he could get a state official to substantiate.

“We’re taking $300,000 that was coming from the Lower 48 and we’re putting it in Haines,” Gaffney said. “The only question is, fundamentally, what’s the multiplier? To say we are losing our sales tax is patently not correct.”

Morphet said any tax-exempt card is also about making the payment of sales tax more equitable for the community, as tourism is supported by a 1 percent sales tax.

“For 30 years people in this town have been paying 1 percent on all their sales to create this industry, to support it, promote it and develop it and that’s come out of a lot of people’s groceries, so to ask some visitors to pay a little bit on their groceries I don’t think is inequitable,” Morphet said.

Assembly member Heather Lende said she hoped people won’t view sales tax as a punitive measure, but rather as a way to maintain a healthy community.

“People aren’t coming to us saying they want less services and, in fact, I think we may be hearing that in some areas people want more services and we only have a couple ways to do it. Sales tax seems to be a standard way,” Lende said.

According to the current fiscal year budget, sales tax brought in $2.9 million in revenue, roughly 25 percent of its budget. The largest percentage of revenue, about 27 percent, came from the state of Alaska, monies that will likely decrease in the future due to the state budget deficit.

“The reason we’re doing this is because we have about a $500,000 deficit,” Lende said. “We have big news from the state. We’re told we need to raise all the money we’re able to. All the sales tax exemptions work out to be a fairly big chunk of dough and I think it behooves us to look at some way to recoup that.”

The borough’s finance department doesn’t have a concrete way to know exactly how many dollars are lost to non-profit exemptions because the category isn’t parsed out when retailers and other businesses file sales tax reports.

Even if all 80 non-profits bought a card at the recommended annual rate of $25, the borough would only earn $2,000. Still, Morphet said, taking small steps sends a message to the citizens of Haines.

“I think we have to show good faith to the public before we go to them for a general (property) tax increase or a general sales tax increase, that we’re trying to tighten up the ship in all these different areas,” Morphet said.

Lende and Morphet said they don’t support a sales tax increase.

The Haines Borough Assembly will hear of the finance committee’s recommendation at its next meeting. Morphet said he’d continue to seek a $50 card.