The Ketchikan City Council took a tentative step Thursday toward raising the single-item sales tax cap, which has remained at $1,000 for 40 years.
The item was put on the agenda by Council Member Mark Flora, who also is a member of the city and borough Cooperative Relations Committee. He said that group talked about it, and agreed to get feedback from the full council and Ketchikan Gateway Borough Assembly.
“And then there was brief discussion about if it were raised, how could it be raised?” he said. “It could be raised across the board, it could be raised seasonally, it could be raised by class of product, or it could be raised by geographic location. Those are some of the examples.”
Flora said he prefers raising the sales tax cap in a way that targets the summer visitors and their purchases. He said the city just raised utility rates on local residents, and he’d rather not hit them again.
City Manager Karl Amylon noted that Ketchikan’s sales tax cap is significantly lower than other communities in the region. He suggested doubling the cap to $2,000.
“Even if we did that, we’re still way behind, but maybe that’s the first step, if that’s something the council wanted to consider,” he said.
Juneau and Sitka have tax caps of about $12,000. Wrangell’s is $1,500 and Petersburg’s is $1,200, according to information from the borough.
Council members talked about creating exemptions to an increased tax cap, such as residential rent. Overall, though, they were in favor of moving forward with increasing the sales tax cap in some way. The city and borough would need to agree on how or whether to do that.
The borough assembly on Monday is scheduled to discuss the sales tax cap, and whether to increase it.
The tax cap is for a single item. As it stands, if you purchase an item, such as a piece of jewelry, that costs more than $1,000, you pay sales tax only on the first $1,000 of that item. According to information from the borough, the exemption meant $3.1 million less in sales tax revenue for the city, and $2.3 million less for the borough.
Also Thursday, the council voted unanimously and with little discussion to move forward with Option 1 for expanding the downtown cruise ship dock. That option will allow a mega cruise ship to dock at Berth 1, and a normal-size ship at Berth 2.
The city also is working with Ketchikan Dock Company on plans to expand Berth 4 to take mega ships. The city leases that berth space from the private company.