Thursday, March 23, 2006

Anchorage 2006 Municipal Election: Proposition 13 - Municipal Sales & Use Tax

Update September 30th, 2010: Because of renewed interest in a municipal sales tax, I have re-titled this post, and updated the links.

This is the last of 13 city-wide propositions to be presented to Anchorage voters during the municipal election on April 4th, 2006.

PROPOSITION 13 - SALES & USE TAX ON TANGIBLE GOODS SUBJECT TO CERTAIN EXEMPTIONS AND A $200 CAP, A PROVISION FOR PARTIAL COST REIMBURSEMENT TO SELLERS COLLECTING THE TAX, AND A SUNSET PROVISION, WITH ONE HUNDRED PERCENT (100%) OF THE TAX RECEIPTS AFTER COSTS OF COLLECTION, APPLIED EQUALLY THROUGHOUT THE MUNICIPALIITY TO FUND ESSENTIAL SERVICES IN SUBSTITUTION OF PROPERTY TAXES.

Shall Assembly Ordinance 2005-126(S) enacting a three percent (3%) sales and use tax on the retail sale or use of tangible goods within the Municipality of Anchorage, the receipts of which shall reduce property taxes and which provides for certain specified exemptions, with a cap of $200 in tax on individual items, with a partial reimbursement provision for sellers collecting the tax, and with a sunset clause, all as provided in the Ordinance, be ratified?

This sales and use tax is subject to (under) the tax increase limitation of the Anchorage Municipal Charter section 14.03 (Tax Cap). Except for the cost of collection and pursuant to Charter setion 14.03 (b) (2) & (3), the tax shall not raise additional revenue beyond that allowed by the Tax Cap.

Imposition of this tax by this ordinance shall reduce property taxes throughout the Municipality of Anchorage on an equal basis by application of One Hundred Percent (100%) of the receipts from the sales and use tax, after costs of collection, being applied to reduce property taxes.

To be voted upon by all qualified voters residing within the Municipality of Anchorage.(AO2006-34)

Analysis: This measure is designed to reduce property taxes, not to gain additional revenue for the city beyond that allowed by the tax cap. It isn't perfect; I would rather see a higher "luxury" limit of $1,000 instead of the proposed $200. However, it will accomplish two important purposes; first, to stabilize the rise in property taxes, and second, to diversify our revenue stream. The more diverse our revenue stream, the stronger and more resilient our financial position. Finally, partial cost reimbursement to sellers will ease the pain of collection for them.

Recommendation: Vote YES

Addendum: Proposition 13 failed on election day; 69.98 percent voted No, 30.02 percent voted Yes.

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