If we're addressing our sales tax code, it's past time to exempt groceries
August 12, 2021
If the assembly wants to make sales tax changes that benefit borough coffers and people's bank accounts, the solution is simple: put a sales tax rate increase on the ballot and exempt groceries upon passage.
Most U.S citizens don't pay sales taxes on groceries. Of the 45 U.S. states with a sales tax, only 13 impose the tax on home food, according to the Center on Budget and Policy Priorities, and most of those states tax groceries at a lower rate or offer a tax credit.
Sales tax is regressive. It hits low-income people harder. The lowest 20% of earners spend twice as much of their income on groceries than the highest 20%, according to a recent U.S. Bureau of Labor Statistics survey. But factor in Haines' high cost of groceries, already much higher than in non-sales tax cities Anchorage and Fairbanks, and many residents are paying a much larger portion of their already strapped budget for a basic need.
The average U.S. family of four spends $149 per week on groceries, according to an Alaska Economic Trends report. In Haines, it's $262. That Haines family would save nearly $800 a year if their groceries were exempt from sales tax.
One argument for the seasonal tax is that we give a break to winter residents and raise the rate in the summer to capture a few more bucks from tourists, but let's not kid ourselves: locals will pay a lot of that higher tax. Go to Haines Home or Lutak Lumber on a Saturday morning in May versus February to see the lumber, tools, flowers and gardening supplies carted away by the truckload by local sales tax-paying residents.
The solution is simple. We can capture those tourist dollars with a modest sales tax increase while exempting groceries. Estimate what the borough would lose as a result of a food exemption and adjust the sales tax accordingly. Many assembly members often talk about the need to make it easier to live in Haines. At a time when income inequality is widening in this country to levels not seen since before the Great Depression, a tax exemption on a basic necessity of life is a no brainer.
-Kyle Clayton, Editor