Somebody do the math on proposed tax

On Tuesday at 7 p.m., the Mat-Su Borough Assembly will be open for public hearings on the new 3 percent sales tax. Ordinance 09-55 is intended to be included in the special election on June 9. I wanted to share my concerns with this proposal and point out how you will be affected if this sales tax passes. I must first state I am in favor of reducing the tax burden imposed on the property owners, but this is not the answer for the general public. The large box stores and developers with large land holding will likely save millions but that savings will need to come from those of us that shop here everyday. I stood strongly in my campaign to oppose any new taxes and feel this is not intended to provide tax relief but do nothing more than to increase the borough’s coffers. It is stated in the third WHEREAS that the sales tax will “establish additional revenue sources which will be utilized to reduce the mill rate” then later under MSB Chapter 3.35 says, “The propose of the tax levied by this chapter is to raise revenue for the retirement of the voter-approved bond indebtedness” meaning a dollar for dollar debt retirement. That would differ from saying the tax would offset operations and thus reduce the mill rate.

The current areawide property tax, not including RSA (road service assessment) and FSA (fire service assessment), stands at 10.326 mills, 1 mill is equal to $1030 per $100,000 of your current apprised value. The sales tax would reduce this by 2.5 mils to an 8 mill areawide property tax base plus your FSA and RSA mills, thereby reducing the taxes on a $200,000 home by $515. This sounds great but you will now be paying 6 percent in Palmer, 5.5 percent in Wasilla and 5 percent in Houston and 3 percent to the many business outside the cities as well.

There is now an amendment to reduce the mill rate to just 2.326 but let’s use the 2.5 reduction to see what our savings would be. Remember utilities, rents, and any services or purchases made within or in some cases sales outside the borough that are delivered here will be taxed. So the wholesalers collect 3 percent from the local store and then the retailer increases the product 3 percent to cover their cost. Then when you purchase the product you will then contribute another 3 percent, so in reality you just paid 6 percent — a double tax. So how much would you need to spend using just the 3 percent to break even if you owned a home worth $200,000.00 to equal the savings from this tax relief proposal. Three percent of $10,000 is $300 so if you spend $20,000 a year on heat, electric, gas, groceries, everything except for airline tickets, food for the Senior Center and medical will be taxed so you just paid the borough an extra $85.

If you sell your car, improve your real property, sell real estate inside or out of the borough and your office is here guess what, pay up or face the late payment and penalties. No, not a small percentage the cities charge but $10 a day for the first 10 days and then $100 for each day after. The borough doesn’t even give you the 30 day grace period to pay your taxes. You must pay within 15 days of the prior month.

The estimated amount of sale tax that would be collected is projected at $20 million. Can’t anyone do the math? The cities combined would bring in that much. Add all the others outside these areas and it would be close to $50 million.

During the five months I have been on the Borough Assembly I have yet to hear anything about reducing spending. I feel the borough could follow the efforts like Wasilla to ask for 5 percent across the board cut in spending departmentwide. That would allow us to reduce the mill rate without imposing a sales tax.

We need to learn how to do more with less and realize that we are in a worldwide recession. The cost to add this tax is estimated at $400,000 adding another reason to expand bureaucracy and another reason to expand our 60-year-old borough office building. However, when the Kenai Peninsula Borough implemented a tax, they spent $700,000 just on the necessary software. How about the cost of enforcement? Again, it sounds like somebody is not doing the math.

I encourage everybody to flood the Borough Assembly chambers Tuesday and let them know how this will impact the future of the borough and their families.

Remember, once this is voted in they can still raise the mill rate on our property. And think about how painful this will be if a state tax is implemented. There is absolutely no reason to add an additional tax during these tough financial times. If this does make the ballot my hopes are that you vote it down overwhelmingly to show the borough and administration how far out of touch they are with the people they represent. We’ll be out there Election Day holding signs saying “Vote NO on this tax.” If you would like, I would be glad to e-mail you the tax as is it proposed. Contact me at markewing@mtaonline.net.

On another note, two of the assembly members are introducing a proposal to hold every other assembly meeting during the day while hard-working people are at work. When I asked about allowing public access for public comments I was told “They can simply take the day off if they have something to say.” The core of government starts right here at the local level. It’s no wonder we are in the mess we are in.

Mark Ewing represents District 4 on the Mat-Su Borough Assembly.