Mayor John Williams has asked the Kenai Peninsula Borough Assembly to delay the effective date of changes to the borough’s tax code that would have put certain recreational sales on a per-person, per-day basis.
Due to take effect Jan. 1, 2007, the administration wants a delay until Jan. 1, 2008.
The code changes, first adopted by the assembly in June of 2005, but suspended while being challenged, unsuccessfully, in a ballot measure this fall, would tax recreational package sales differently than under current law. The new code would tax various elements of a recreational package for instance, a fishing trip coupled with a rental car, tour and bed and breakfast stay for each person and for each day.
Current law allows one payer to pay the bill in total, thus making the entire costly package eligible for the borough’s sales tax ceiling that limits taxation to the first $500 of a sale.
Borough officials who supported the code rewrite say bunching recreational sales in such bundles is unfair to other taxpaying enterprises and costs the borough needed tax revenues.
Some members of the tourist industry opposed the change, arguing that it was unfairly directed at one industry and that collecting taxes in the new way would be complicated.
That it could be complicated led borough Finance Director Craig Chapman to recommend to the assembly that a year’s delay would be in the best interest of the borough, “so that these concerns regarding how the new taxation procedures will be implemented and what constitutes a ‘recreational sale’ can first be adequately addressed.”
The proposed delay is on the Dec. 5 assembly agenda is laid out in Ordinance 2006-41, which is up for introduction. A Jan. 2, 2007, public hearing date is anticipated. If adopted that night, it would be made retroactive to the previous day, Jan. 1.
Williams said Tuesday that after meeting with people involved in instituting the new sales tax regime, it became apparent that there were areas of concern and areas that had been overlooked about how it would work and how it could affect various sized businesses.
On one end of the spectrum were concerns of larger companies who often book large tour packages well in advance, who would have to institute the tax on packages already booked. At the other end, small businesses operated by just one person might run into bookkeeping problems regarding multi-part tour packages delivered in more than one sales tax jurisdiction.
Williams also said he had heard from some older business owners who complained about not being computer literate and worried that the new system might prove too complex. Williams said, however, that he believes most business owners could do it.
“In this day of modern computer systems, I think it is very simple with a small home computer to set up a spreadsheet, develop a program to input data and calculate a tax,” he said. “I have to tend to believe most know a bit about using a spreadsheet and could accomplish that.”
Williams added, however, that the borough was considering developing just such a simple program and providing it to any local business that might need it.
Chapman said Tuesday that the finance department would hold educational meetings with business owners across the peninsula over the next year to inform them how the new per-person, per-day provision will work.
Hal Spence can be reached at firstname.lastname@example.org.
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