Juneau may drop sales tax on food in exchange for higher summer tax rate

Juneau voters will likely be asked this fall if they’re willing to increase the city’s 5% sales tax to 6% during the summer in exchange for exempting food from sales tax year-round.

The Juneau Assembly, meeting as the Committee of the Whole, voted unanimously May 2 to have city administrators draft language for an ordinance that would repeal the food tax if voters approve the summer sales tax increase.

But numerous questions were raised about exemptions for nonprofits, effects on businesses that don’t get summer tourists among their customers, and if the amount saved on food purchases is significant enough to benefit residents.

“We’ll discuss it in more detail later,” Mayor Beth Weldon promised after the committee’s vote.

The assembly is required to hold a public hearing and approve the ordinance in a subsequent meeting by Aug. 28 for it to appear on the October municipal election ballot.

City Finance Director Jeff Rogers told the committee the food tax exemption would save the average household about $143, with the city losing about $400,000 a year as a result.

“Admittedly that’s not a lot of money, but when you think of trying to reduce the sales tax burden on the public and take in the same amount of revenue $143 isn’t nothing,” he said.

Increasing the summer sales tax would result in the average summer visitor spending about $1 more, he said.

The motion approved by the committee does not specify the duration of “summer months,” nor was the length discussed by the committee, but documents provided by the finance department assume six-month summer/winter periods.

Reaction from assembly members was mixed, but more supportive than previous discussions. Assemblymember Wade Bryson said, “I’ve started this conversation completely against” the idea, but now sees some benefits to eliminating the food tax, and if there are ways to offset other impacts “it will make the decision easier.”

“I’ve been hesitant to increase the sales tax during the summer months,” he said. “While many businesses do depend on summer tourism there are businesses where Juneau residents are their primary customers. I would like to get businesses’ input at the very least to see what the impacts on them will be.”

Assemblymember Alicia Hughes-Skandijs said she’s less concerned than Bryson about the impact on non-tourism businesses.

“My decision to purchase or not to purchase something is not going to be influenced by a 1% difference in the sales tax,” she said.

How much a $143 annual savings will actually benefit households was questioned by Weldon, although she said that’s among the reasons it’s important the issue be decided by a vote of the public. “I guess we won’t know what everybody else’s viewpoint is until we send it to the voters.”


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