After lengthy discussion Monday, two tax items on the Ketchikan Gateway Borough Assembly agenda each was postponed indefinitely. The first was an increase to the sales-tax cap, and the second was a tax on retail marijuana.
The first item to be discussed and ultimately postponed was a proposed increase to the sales-tax cap on single-item purchases, which has remained at $1,000 for about three decades.
Originally, the proposal tripled the tax cap, but that wasn’t going to fly, so during the second meeting in July, the motion’s co-sponsor, Assembly Member Bill Rotecki, asked that it be lowered to $1,500, and adjusted to inflation every five years.
It still wasn’t a popular proposal, though. Local business representatives spoke during public comment against raising the tax cap, stating that they compete against big-box online stores that offer free shipping, so taking away this small advantage could affect their sales.
Hannah Ramiskey of Schmlock Mechanical said it’s in the community’s interest to help local businesses, and not provide more incentive to shop online.
“They don’t provide any services here. They don’t give money to your children,” she said. “They don’t provide employment for your workers here. As retail gets smaller and smaller and smaller in Ketchikan, those are jobs that are gone. That is money donated through all of those stores – donations to this community — and it’s harder and harder.”
Rotecki questioned whether someone would choose to buy online rather than locally over about $30 – which is the extra sales tax they would pay if the tax cap jumped to $1,500.
Rotecki’s argument in favor of raising the tax cap is that leaving it as is means a greater percentage of taxes comes from smaller-item sales, putting more of a burden on lower-income residents.
But, with an apparent majority on the Assembly opposed to raising the sales-tax cap, he suggested not raising it, but still adjusting it to inflation every five years.
“The inflation thing is a very minimal increase. I don’t know that this body would have the nerve to do anything, and I think that doing nothing is really wrong, so I propose that we do something, which is inflation-proofing,” he said.
But then, Thompson proposed postponing the whole thing indefinitely. He argued that the conversation was premature, and the Assembly needs to have a wider discussion about taxes in general.
That motion passed 6-1 with only Rotecki voting no.
The retail pot tax is another item that carried over from the second meeting in July. During that meeting, an ordinance that called for a marijuana sales tax of up to 10 percent was sent back to borough management with direction to link the additional tax to the potency of marijuana products, such as concentrates and edibles.
When it returned to the Assembly, though, there was lengthy discussion about how complicated the borough’s excise tax should be. Eventually, Assembly Member John Harrington suggested indefinitely postponing the measure and asking borough management to come back with another, more-simple ordinance calling for a 5 percent excise tax on retail marijuana.
That motion passed 4-3, with Painter, Bailey and Assembly Member Stephen Bradford voting no.
Thompson, though, added that he’d like some options with the new ordinance, including an additional excise tax related to potency.
“I think there’s some validity to an additional excise tax on potent products that can be a danger to children, and we’ve seen this in places in Colorado where toddlers pick up something they think is a candy bar and wound up in the hospital,” he said. “An additional excise tax on those types of products to dissuade their use is probably warranted.”
The Assembly also discussed a request from some Dock Street businesses that the borough remove two wooden benches next to the Centennial Building parking lot. The businesses claim there has been activity on those benches that could keep customers away from that street.
The Assembly directed borough management to talk it over with City of Ketchikan officials.