By Jessica Edwards
Should the Haines Borough exempt automotive and marine fuel, heating
oil, and bulk propane from local sales tax?
Haines residents may have a chance to vote on the question if an
initiative currently moving toward the petition stage makes it to the October ballot.
Sponsors say the borough’s 5.5 percent sales tax is exponentially
inflating fuel costs. As oil prices rise, the 5.5 percent tax spikes prices beyond what
consumers can bear, they say, strapping residents and stifling the local economy.
Borough leaders say cutting taxes on fuel last year would have
eliminated nearly $420,000 in municipal funds, which paid for services such as ambulance
and police service, public works and capital improvement projects.
Rising fuel prices affect those costs as well, they said.
Petition sponsor John Nowak said he started the initiative after
getting no response from the assembly June 10 on the question of limiting tax on heating
oil and automotive fuel.
Nowak told the assembly the borough should reevaluate a tax structure
for fuel and heating oil that added 5.5 percent to the cost, whether gas cost $3 or $7. He
recommended exempting taxes or charging a flat fee per gallon.
The language of the initiative petition application says automotive and
marine fuel, home heating oil, and bulk propane would be exempt from taxes.
"When you fill up your oil tank for $1,000, that’s $55 in
taxes to the borough," Nowak said in an interview Tuesday.
Nowak said he hoped to get the attention of the borough assembly, and
have it pass a similar ordinance. "That’s what we’d like them to do."
Asked about effects on the borough’s budget should taxes on fuel
be waived, Nowak said the state funded many road and capital improvement projects, and the
borough should be more conservative with spending.
Petition co-sponsor Al Kelly also criticized what he called unwise
municipal spending, giving as an example spending $10,000 to research wood heat for the
school, which he said was the borough’s most efficient building.
Nowak and Kelly said the response to their petition request had been
overwhelmingly positive, and were confident of success. Gathering the requisite 190
signatures to move the petition to the October ballot would be easy, they said. "It
affects people’s pocket books," said Nowak. "This is a no-brainer."
"If you offer to take taxes off fuel, who’s going to say
no?" Kelly said.
Borough chief fiscal officer Jila Stuart said sales tax on automotive
and marine fuel, heating oil, and bulk propane contributed roughly $420,000 to borough
coffers – nearly 18 percent of total sales tax revenues – between May 2007 and
April 2008.
Stuart said exempting fuel taxes last year would have meant a cut of
about $115,000 from services in town, including police and public works, $40,000 less for
the medical service area, including ambulance service, a loss of $75,000 from the
area-wide general fund, which funds the school, library, pool, and more, and a loss of
$115,000 for borough capital improvements projects.
Stuart said sales tax revenues were highest in July and August, not in
the wintertime, suggesting summertime visitors purchased a high volume of fuel, thereby
helping subsidize borough functions.
Borough mayor Fred Shields said he wondered if the petition sponsors
realized how substantial a source of revenue fuel sales taxes were for the borough.
Waiving taxes on fuel would unfairly favor heavy users, Shields said. "If that
happens, everyone else will be subsidizing those who use a lot of fuel."
Assemblyman Doug Olerud said he hoped to see the issue on the agenda
for the next borough assembly meeting. He said high fuel prices affected everyone, but
taxes on fuel were also a significant source of revenue for maintaining borough functions.
"I understand the sentiment behind it," said assembly member
Deborah Vogt. "I would be in favor of some sort of (income based) hardship
relief." But she opposed waiving taxes on fuel, which would eliminate a substantial
source of borough revenue and encourage fuel consumption.
Vogt called a tax exemption a "subsidy that’s slanted towards
heavier users. It’s not fair." The price of fuel, although painful, encouraged
conservation and investigation into other energy sources, she said.
Federal taxes on gasoline are 18.4 cents per gallon, and the state
charges 8 cents per gallon for all fuels used on highways. The borough levies a 5.5
percent sales tax on the raw fuel costs plus state and federal taxes, a tax structure
upheld by the borough attorney, Stuart said.
