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Assembly considers collecting sales tax from nonprofits


January 18, 2018

The Haines Borough Assembly may consider levying sales taxes from nonprofits and other municipal sales when next year’s budget process begins.

“As our economy continues to be challenging we have to really look at how we’re handling things and this is directly in response to a staggering economy,” said assembly member Brenda Josephson.

The assembly’s finance committee discussed the possibility this month of collecting sales taxes from retail sales by nonprofit organizations and other municipal sales like boat moorage and marine fuel.

Sales taxes in the borough currently contributes roughly 25 percent of the operating budget, which is $3 million annually.

Josephson and assembly member Tom Morphet said when nonprofits act as commercial entities they compete with local businesses.

“I support certain nonprofits having to pay when they are acting on an equal footing as businesses or when their sales are akin to sales of businesses,” Morphet said.

Juneau, Sitka and Ketchikan have adopted slightly different models for taxing nonprofits. Nonprofits in Juneau are exempt from collecting sales tax if income from sales is also exempt from federal income tax. In Sitka, nonprofits with no office hours or paid employees are exempt from collecting. Nonprofits in Ketchikan are exempt except for commercial activities, such as a thrift store.

“My feeling is that collection of sales taxes should be tightened up, but while we have quite a bit of the public’s money in savings, there does not seem to be support to pursue these until savings are spent down,” Morphet said. He said the borough has savings it can use to cover deficit spending for a few more years.

“It is certainly worthy of assembly-wide consideration, and something we’ll eventually need when we run out of savings,” Morphet said.

The governments of Juneau, Petersburg, Wrangell, Sitka and Ketchikan all levy sales taxes from boat moorage. Wrangell, Sitka, Ketchikan and Skagway levy sales taxes on marine fuel. Some of those communities also take advantage of boat storage, water and sewer service, parks and recreation, and garbage and electric.

“I don’t care what other communities do, I care what is right for Haines to do,” said assembly member Stephanie Scott. “I think (nonprofits) would be happy to charge sales tax if in fact they’re actually selling something.”

Josephson said she would like to do more research to better understand the topic before moving forward. But her priority is to figure out where the borough can reduce costs.

“It’s very important that we start looking at ways that we’re going to be cutting expenses and I think that needs to be the first conversation,” Josephson said. “I’m not interested in levying any new taxes until we’ve addressed cuts in our borough budget.”


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