Assembly finance talks tax exemptions

Wednesday night’s Assembly Finance Committee meeting was all about tax exemptions.

During the meeting, the committee discussed sales tax exemptions for cruise ship and massages, and ultimately forwarded three manufacturing property tax exemptions to the full Assembly for consideration.

The city offers a property tax exemption for qualifying manufacturing businesses in an effort to boost employment in Juneau and stimulate city exports or replace imported goods with products made locally.

This year three businesses — Alaska Glacier Seafoods Inc., Taku Smokeries and Alaskan Brewing Company — all applied for exemptions. The total assessed value of those properties is $14.8 million; their total taxable value after the requested exemptions would be $6.1 million. That means the total taxes due on their assessed value would be about $65,000, more than $69,000 shy of what the city would get without the exemptions.

The committee decided unanimously to forward the exemptions on to the full Assembly for consideration.

City Finance Director Bob Bartholomew asked the committee to begin thinking about how it would like to tackle a sales tax inconsistency within the cruise industry. Currently, only one cruise company levies city sales tax on the items it sells on board while in port in Juneau. Bartholomew didn’t name which company because that information is not public.

City code requires that all cruise ships levy city sales tax on on-board sales while in port, and those sales “have probably been taxable as long as the boats have been coming here,” Bartholomew said. Right now the city is not enforcing this, which is where the Assembly will have to come in.

The choice, Bartholomew said, will come down to whether the Assembly wants to begin enforcing city tax code as it pertains to cruise ships or whether it will change the code to accommodate companies not currently in compliance. He also noted that “18 percent of sales tax that we collect is from customers who come off the boats and buy locally.”

The Finance Committee didn’t make a call one way or another Wednesday, opting instead to take more time to research the matter.

The committee also decided that despite a recent change in professional licensure — allowing massage therapists to be state licensed — the city will not grant tax exemptions on all massages.

City sales tax administrator Clinton Singletary said that since massage therapists now have a state license, several people were wondering whether all massages would be sales-tax free since they could be considered medical in nature. The city currently doesn’t apply sales tax to medical purchases.

The committee decided, however, to maintain the city’s status quo, which dictates that only massages prescribed by doctors will be exempt of sales tax.

Assembly member Barabara Sheinberg, who said she gets massages, argued that massages “whether they’re prescribed or not are therapeutic.” She said that requiring a prescription in order for a massage to be tax free just adds another expense to the process.

Assembly member Loren Jones, who also said he gets massages, doesn’t mind paying taxes because he sees them as a “luxury expense.” He argued that “we all do things that we think are medically necessary,” like buying over the counter medications, which do include city sales tax.

• Sam DeGrave can be reached at sam.degrave@juneauempire.com or at 523-2279.

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