Should the Haines Borough and nonprofits collect sales tax on sales of goods and services?
An assembly subcommittee looking at ways to raise revenues discussed those questions Wednesday, sharing information about other Southeast communities that collect sales tax on enterprise fund functions such as water and sewer, harbors and utilities.
Currently the Haines Borough collects no sales tax on its services and does not require nonprofits to collect sales tax. However, some communities in the region do both those things.
The Haines Borough also doesn’t collect sales tax on marine fuel it sells at the harbor.
Fisherman Bill Thomas said he and other fishermen would likely travel elsewhere to buy already cheaper fuel than is available in Haines.
Fisherman Norm Hughes said the harbor is a big economic driver in Haines and as long as the borough’s annual budgets are reasonable, collecting more taxes to fund the harbor shouldn’t be an issue, as long as they’re fair.
Juneau collects sales taxes on enterprise fund functions, as does Skagway, Sitka, Ketchikan and Petersburg.
Finance committee member Tom Morphet said that in Sitka only 501c3 nonprofits that don’t have paid employees and regular business hours are exempt from collecting sales tax. He said it was a model he wanted staff to explore and see how it could fit with Haines nonprofits.
Haines Borough fiscal officer Jila Stuart said Haines is “very generous” about the nonprofits it exempts compared to other communities. She said the borough exempts four different types of nonprofits and only 501c3s are charitable organizations.
“Just because you’re a nonprofit doesn’t mean you’re a charitable organization and maybe we need to be more strict about who we exempt,” Steward said.
Sean Gaffney said it’s an issue that’s been discussed in the Haines Chamber of Commerce.
“Not to speak for the chamber but it’s a thing that’s been discussed there as well and I think the sentiment is paying that tax on goods that you sell is a reasonable thing…,” Gaffney said.
Thomas and Don Turner both said the borough assembly should make sure they look for ways to cut the budget before adding additional taxes.
Turner took issue with a $17,000 budget amendment the assembly voted to include in the fiscal year 2018 budget that will allow the swimming pool to open for a swim on Sundays in winter.
Thomas reiterated that when taxes are raised, people will shop elsewhere.
Gaffney urged the committee and assembly to take “small steps” when it came to adding sales tax collection obligations.
Interim borough manager Brad Ryan said having non-profits collect taxes is complicated when they aren’t selling items such as tickets or T-shirts.
Assembly member Margaret Friedenauer said making nonprofits collect sales tax might add too much of a hardship on them and the volunteers who run fundraisers and other events.
“Nonprofits are going to have to figure out a mechanism to charge he sales tax and remit it,” Friedenauer said.
Ryan agreed and said selling items such as tickets to the fair is easier, but other items would be “muddied.”
Fisherman Hughes said it’s not “rocket science” to charge .055 for sales tax or round up prices and said non-profits are “just going to have to figure it out.”
Committee member Ron Jackson said, moving forward, the committee should consider whether certain nonprofits compete with private businesses, if a non-profit a charitable organization, the burden of the tax for the organization, and how frequently they do business.
The committee agreed to come back with proposals and invite nonprofits to attend the next meeting.
Morphet also said he wanted to explore the reason other municipalities collect sales tax on enterprise fund functions.
Hughes also suggested at the end of the meeting that the borough consider restoring personal property taxes and charging more than $350 for burial plots at Jones Point Cemetery.
“We give up a three foot by six foot chunk of real estate for nothing, forever,” Hughes said.
Personal property tax – which applies to business equipment – was levied locally for more than 50 years before the assembly eliminated it about eight years ago.
The finance committee also has discussed alcohol, tobacco and marijuana taxes along with implementing ambulance fees. Longtime fireman and ambulance crew member Al Badgley spoke against an ambulance fee at a budget workshop Tuesday.