As the city’s Tax-Exempt Review Committee considers altering Juneau’s sales tax, it’s important that the committee suggests a plan that will balance the books for years to come.
It’s a balancing act: If too many exemptions go away, Juneau could become an unaffordable place to live. Keep too many, and our city doesn’t have enough revenue, leaving us in the same position we’re in right now.
When the City and Borough of Juneau Assembly makes its decision, we hope to see equal taxation for all. People of all ages need paved roads, public transit and other services provided by the city, and the best system is one that treats everyone equally. Based on public input, potential added revenue, and interviews with city leaders and members of the public, we encourage these changes:
— Raise the sales tax cap to reflect inflation. It’s been more than two decades since the $7,500 tax cap was set. The cap should be somewhere between $10,000 and $12,500. We disagree with assertion that increasing the tax cap will drive consumers to Anchorage and Seattle for large purchases. For example, the tax on a $20,000 car would be $1,000, far less than the cost of a plane ticket and barging a vehicle back to Juneau. The convenience and time saved will keep people buying local first.
— Discontinue out-of-town sales tax exemptions. Those from other Southeast communities will still shop here. They aren’t coming to Juneau because we’re the best bargain in Southeast; they come because we have the largest variety of stores. If Juneau residents are expected to pay taxes, so should everyone else.
— Close the sales tax loophole for services. We see no reason why there should be a distinction between selling a product and selling a service. Does a business use fewer community resources simply because it sells the skills of its employees rather than a product off the shelf? The most common example in this argument has been lobbying services, but this loophole also applies to things as varied as legal services, land surveying and housecleaning.
— Discontinue the senior sales tax exemption. We were on the fence about this one until Thursday, when so many seniors spoke in favor of doing away with the exemption. Their logic swayed us. Seniors aren’t the only vulnerable people in Juneau. Young families struggle, too. Rather than saying one group deserves a tax exemption and another doesn’t, all should receive equal treatment.
— Exempt fuel and electricity from sales taxes. This is one area where we can make Juneau a more affordable place to live for all, and it compensates for the elimination of the senior sales tax exemption.
— Exempt food. Like electricity and heating fuel, food is another necessity. Juneau food costs are already about 20 percent higher than the Lower 48 average. Exempting food sales would be another step toward making Juneau more affordable for all residents — no matter their age.
The food exemption comes with a cost: It’s unlikely the city can afford to exempt food and increase revenue enough to fill its budget deficit. For that reason, we support a 1 percent increase to the sales tax to 6 percent. The notion of a sales tax increase and targeted exemptions was proposed by the Juneau Chamber of Commerce in Friday’s Juneau Empire. The Assembly doesn’t have the ability to do this on its own — It requires voter approval. Tie the increase to the rest of the changes we’ve suggested, and allow voters to decide.
The changes we’ve outlined provide a double benefit: They increase revenue and reduce the amount of work needed to maintain the city’s sales tax system. That means fewer employees and lower costs.
Regardless of which exemptions the city keeps or eliminates, frugal fiscal management must play a role. While adding revenue, the city has an obligation to continue identifying areas of savings and to cut costs. Like residents and taxpayers, the city also must live within its means, and its review of tax exemptions should be one tier of a bigger financial management plan.
— Juneau Empire,