The Haines Borough Assembly will review a finance committee recommendation that the borough exempt residential renters from paying sales tax if they live in Haines for at least nine months a year.
The topic is on the agenda for the assembly’s July 10 meeting.
Assembly member Sean Maidy introduced the idea last month to exempt residential rentals from the borough’s general sales tax.
He said the existing 5.5 percent tax (4 percent borough-wide and an additional 1.5 percent within the townsite) is “painfully regressive” because renters indirectly pay property tax as part of their rent, and then pay sales tax on top of that. Homeowners do not pay sales tax on their mortgages, he said.
“Everybody’s got to live somewhere,” Maidy said.
The nine-month minimum to qualify for an exemption is similar to the requirement to qualify for the Alaska Permanent Fund Dividend, which allows residents to leave the state for up to 180 days a year as long as they maintain their primary home in Alaska and do not establish residency elsewhere. Maidy said his proposed nine-month requirement is longer than a season, and a person who stays that long is making an effort to be here long-term.
“I want Haines to be the gold star for regulating short-term rentals to be profitable and still worthwhile for people to do.” Maidy said this is only the first step he’d like to see in regulating rentals.
The rental exemption would create about a $70,000-a-year hole in the borough budget, about 2 percent of total sales tax collections, but assembly finance committee member Brenda Josephson said the effect would be minimal. “We’ve got an awful lot of people that are not going to fit in this nine-month exemption,” she said.
Josephson said she supports the exemption, which she said would target people in need who are trying their best to live in Haines year-round, rather than the people who come to Haines for several months and leave.
Finance committee chair Tom Morphet said he has no problem moving the proposal forward, but he believes there are other greater inequities in the sales tax code.
“This is an incremental approach to the questions of where we charge sales tax and where we don’t,” Morphet said. “I’d rather look at (sales tax on food) because I think that’s the greater inequity, but I wouldn’t mind having this discussion with the assembly.”