Current weather

  • Scattered clouds
  • 54°
    Scattered clouds

Tanker, cruise ship tax floated

Posted: Thursday, October 27, 2005

Pete Sprague is proposing taxing the value of large, nonfishing, commercial vessels that drop anchor at peninsula ports.

"In these challenging fiscal times, I believe that not only do we need to show restraint in all fiscal matters, but we also need to explore new ways to generate operating revenues for the borough," Sprague, a member of the Kenai Peninsula Borough Assembly, told his colleagues in an Oct. 20 memo.

The memo accompanied Ordinance 2005-44, which he wants introduced at Tuesday's assembly meeting.

Personal property not otherwise exempt from taxation is subject to annual taxes to support school and borough activities. Owners of most taxable watercraft are exempted from value, or "ad valorem," taxes, and pay instead a flat tax based on a length-based tax schedule. Personal aircraft also pay a flat tax.

However, commercial aircraft are taxed on an ad valorem basis through a borough landing schedule formula that prorates an annual tax according to the total hours each aircraft spends at a borough airfield.

"I believe that an adjustment needs to be made to the methodology of taxation on commercial, nonfishing vessels," he said, adding they should pay an ad valorem tax prorated in a fashion similar to commercial aircraft.

The current flat tax schedule exempts vessels shorter than 20 feet from any tax.

From there, the tax rate climbs from $50 a year for boats ranging from 20 to 25 feet in length, up to a maximum of $1,000 annually for vessels 100 or more feet in length.

Vessels home-ported outside the borough that come to the borough for repair, servicing or seasonal storage (September through June) in a boatyard licensed to collect sales taxes are deemed to be exempt from the flat tax.

The exemption, however, does not extend to taxes charged by cities, which have the option of establishing their own exemptions. Nor does the borough exemption apply to vessels home-ported elsewhere that fish in or deliver catch within the borough during the June-September fishing season. They are subject to taxation.

Sprague's proposal would make certain vessels longer than 100 feet subject to an ad valorem tax rate, rather than a flat tax rate. That is, they would be taxed on their values. Vessels used primarily for some aspect of commercial fishing would be exempt from this ad valorem provision, however.

The borough assessor would establish formulas for calculating a prorated tax based on the value of the vessel.

Sprague said he was primarily targeting oil tankers and cruise ships. He said the law likely would be subject to federal restrictions if they applied.

"I haven't talked to anyone (on the assembly), but I think it is really timely," he said.

Property taxes assessments begin Jan. 1, he said. If the ordinance is introduced Tuesday and acted upon in December, the law, presuming it passes, could be in place in time for the new tax year.

"I have no idea how much revenue it would generate, but I anticipate it will generate a lot of discussion. This could be a big one," he said.

Presuming the assembly accepts it for introduction Tuesday, Ordinance 2005-44 will be scheduled for a public hearing at the Dec. 6 meeting.



CONTACT US

  • 150 Trading Bay Rd, Kenai, AK 99611
  • Switchboard: 907-283-7551
  • Circulation and Delivery: 907-283-3584
  • Newsroom Fax: 907-283-3299
  • Business Fax: 907-283-3299
  • Accounts Receivable: 907-335-1257
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING

MORRIS ALASKA NEWS