The per-person, per-day tax places an unreasonable burden on businesses to collect, is difficult for taxpayers to understand, will drive some business away and will not make any additional revenue for the borough.
Here is one example of many as it pertains to just my business: Five hunters book a six-day hunting trip on a boat. Day one leaves out of Homer, days two through five are in and out of borough waters and day six returns to Homer. Are we required to collect 6.5 percent of the entire trip or only the first day? Are days two through six taxed at 2 percent or can that be avoided if we leave borough waters at some time during the day.
Who pays for the software to keep track of this mess and make new invoices? We are already dealing with point of sale versus point of service issues. If we are required to collect tax in this manner, will the cruise ships leaving from Seward also have to remit sales tax on their entire trip? This tax could drive the cost of the trip up nearly $900, causing some to rethink going.
Pete Sprague is wrong if he thinks business owners aren’t opposed to the new tax. I can only guess that he has not spoken to someone who will be seriously impacted or understands the ramifications. All of the affected business owners I have talked to are very opposed to this type of additional tax. They are most concerned about lost business due to higher costs to the client along with difficult and confusing record keeping.
There is an amount at which some people just won’t come. A small amount of lost business could seriously affect the small business owner. The new tax also makes it more difficult and costly to do business. We now have a new layer of accounting for split trips with even more paperwork to ensure smooth audits.
If this tax were supposed to collect $250,000 in additional revenue and require only four additional borough employees (at $75,000 each for pay and benefits) to administer and audit, the borough would actually be in the hole $50,000 each year. This does not include the combined costs to the businesses in paperwork and lost revenue. That number would surely exceed the $50,000 lost by the borough several times over.
This tax is a bad idea.
Tim Cashman Jr.
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