Will flat tax fly on planes?

Borough assembly considers ordinance at Tuesday meeting

Posted: Monday, January 19, 2004

An ordinance that would impose a flat tax of $75 per engine on personal aircraft on the Kenai Peninsula is scheduled for a final public hearing and a vote at Tuesday night's Kenai Peninsula Borough Assembly meeting.

Existing borough tax law applies an ad valorem, or value-based tax, on all personal property, exempting the first $100,000 of personal property value from that tax.

Boats and automobiles, however, are exempted from the value-based tax and instead are subject to a flat tax.

Ordinance 2003-45, introduced in November by assembly member Chris Moss of Homer would add personal aircraft to the flat tax rolls, charging a tax based on the number of engines -- $75 per engine.

The flat tax would apply to any aircraft issued a Federal Aviation Administration N number. It would not apply, however, to aircraft owned by scheduled commercial carriers, which are taxed on an ad valorem basis, but only for the time they spend in the borough.

In a memo to the assembly, Moss explained the logic behind changing the taxing basis for personal aircraft and putting them on the same footing as boats and autos.

"Aircraft are similarly motor powered vehicles used for transportation, and it seems equitable to impose a flat tax upon aircraft rather than an ad valorem tax," he said. "Anchorage currently imposes a similar 'registration tax' on aircraft situated in the Municipality of Anchorage."

Moss said trying to impose the flat tax on commercial carriers would be problematic and potentially could result in double taxation or a complete loss of tax revenue. Flat taxes are not generally apportioned between jurisdictions, he said.

The change would have an impact on borough revenues. According to an estimate provided by borough assessor Shane Horan, aircraft taxed by the borough in 2003 brought in roughly $218,770 based on the borough's 6.5-mill tax levy.

Under Ordinance 2003-45, the flat tax would have covered more total aircraft because it would have included planes worth less than $100,000, which under the ad valorem tax were exempted. However, the flat tax would have generated just $39,000, a difference of about $179,770 in tax revenue.

Tuesday's meeting also will feature a 15-minute presentation from Agrium spokesperson Lisa Parker, who will discuss the facilities operations. A recent announcement from the Canada-based Agrium Inc. warned that unless sufficient gas supplies were obtained, it is possible the Nikiski plant, which accounts for some 230 local jobs, could be closed in 2005.

Central Peninsula General Hospital officials also are expected to present their latest quarterly report to the assembly.

The assembly's agenda includes several resolutions and ordinances for introduction.

Included on the list is Ordinance 2003-19-34, which would authorize a $50,000 intergovernmental loan to the Seward-Bear Creek Flood Service Area to provide start-up funding for developing a flood-prevention plan. A public hearing is tentatively scheduled for Feb. 17.

Ordinance 2003-19-35 would authorize acquisition of 12 acres in Seward for a new Seward Middle School and appropriate $346,500 for the purpose. A public hearing is tentatively scheduled for Feb. 17.

Ordinance 2003-19-36 would appropriate $55,000 to cover costs of the March 30 special by-mail election regarding how to fund cocurricular activities. A public hearing is tentatively scheduled for Feb. 3.

Resolution 2004-006, introduced by assembly member Betty Glick of Kenai, opposes Senate Joint Resolution 18, which seeks to establish a Percent-of-Market-Value (POMV) spending program for the Alaska Permanent Fund.

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