The Haines Borough Assembly Finance Committee is interested in abolishing sales tax for long-term renters that would leave a $70,000 hole in the borough budget, but assembly members are looking for more information.

At the group’s May 21 meeting, assembly member Sean Maidy said he would like to see long-term renters and their landlords exempt from paying the borough’s 5.5 percent general sales tax. Maidy said the tax is considered regressive, meaning it only impacts renters who statistically make about half of the annual income of homeowners. Homeowners with a mortgage are exempt from the tax.

“Right now we are a very progressive town that is regressive and I would like to see our laws match our intent,” Maidy said.

Landlord and business owner Chris Thorgesen said he was shocked that the borough charges the sales tax, which he incorporates into the rent for his apartments. On a $1,000 per month lease, the tenant has to pay $55 in taxes. Thorgesen said he makes tenants aware of what they are paying in the lease agreement.

“That’s like the most unfair thing I’ve seen,” Thorgesen said. “I call it the poor person tax.” Landlord and laundromat owner Leonard Dubber agreed. “I see this as a fairness issue,” he said. “I think the most important thing a government could do is be fair.”

The borough’s definition of long-term is 30 days or more, but assembly member Brenda Josephson said she wouldn’t be inclined to help people who stayed in town temporarily or only for several months, but instead the people who try to live in Haines year-round. She said abolishing the tax could incentivize people to sign six-month or annual leases.

Thorgesen argued that he has had tenants live on month-to-month lease agreements for 20 years, and they often make that choice because they don’t know what life will bring them. But he said he would love to reduce rent for his tenants if the exemption goes through. “I don’t like being the tax collector,” Thorgesen said.

Borough finance director Jila Stuart said if long-term renters were exempt, it would reduce the borough budget by about $70,000.

“Every time we take up sales tax we open a can of worms,” said assembly member Tom Morphet. He said he would rather support a decrease in sales tax charged on food, which everyone in the borough pays. Manager Debra Schnabel said it would be “unrealistic at this time to talk about not taxing food.”

Morphet said he was also concerned about how the borough would make up the lost revenue. Assembly member Brenda Josephson said if the borough targets people with six-month leases and longer, the deficit would be less than $70,000. She also suggested making budget cuts elsewhere instead of hiking other tax rates.

“I hope the committee supports getting further data just so that we can be educated and see if there’s a potential here to help improve people’s lives,” Josephson said.

Maidy said the exemption wouldn’t make too much a difference for the borough besides provide equity in the community, and a break for people who are often least able to pay sales tax.

The committee also discussed getting rid of the borough’s requirement that everyone who rents a room in their home has to get a business license, which would keep the borough’s list of businesses to those that are “entrepreneurial,” Josephson said.

Maidy and borough staff will compile more data on the issue and write a draft ordinance to come back to the committee.

Petersburg and Juneau exempt sales tax on residential renters. Ketchikan exempts sales tax on rentals in excess of $1,000. Sitka, Wrangell and Skagway all charge sales tax on rent.