Alaska News

Our view: Sales job on sales tax

It's ironic that Anchorage's new mayor is determined to pursue a sales tax. Dan Sullivan won election as a tight-fisted conservative who'd rein in what he said were the big-spending ways of his predecessor. Sullivan looks to a sales tax not to grow government, but to offer some degree of property tax relief. And it's true, a sales tax would diversify the city's tax base. Commuters and visitors would pay something for the city services they use.

But we've been down this road before, and Anchorage voters have always said "no."

Not even close.

Sullivan knows a sales tax will be a hard sell. It requires a 60 percent supermajority, thanks to a 1997 voter initiative.

That's why Sullivan plans to spend a year or so performing groundwork with key constituencies.

To top the 60 percent mark, he'll need to craft a tax relief package that delivers a big payoff to most ordinary voters. In past elections, we have seen that using all sales tax proceeds to cut property taxes dollar-for-dollar wasn't enough to carry the day. Voters rightfully questioned why the city would create a new tax-collecting bureaucracy and hand millions of dollars in relief to those who own the city's hotels, malls, and office buildings.

Probably there is only one way to lure voters into approving a sales tax, and that is the Chilkoot Charlie's strategy: Tax the other guy and pass the savings along to you, the average citizen.

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Generous exemptions, on essential goods and other common items, would help ease the sting on ordinary voters. Offering much bigger exemptions to residential property taxes, as opposed to business property, would help, too -- an approach Mayor Sullivan seems willing to consider. Unfortunately, to expand residential tax breaks requires a change in state law, which generally presumes that all property will be taxed in a similar way.

Sullivan says he likes a sales tax because you can control how much you pay by controlling how much you consume. Not quite. If you're well off, like Dan Sullivan, you can do that. But it's a lot harder when you're living paycheck to paycheck, hoping the car doesn't break down or the kids need a trip to the dentist.

So, to have a chance, a sales tax will have to exempt essentials, like groceries and prescription medicines. What else is exempt will prompt a frenzy of special interest lobbying. Gasoline -- in or out? Clothes -- in or out? What about professional services like doctors, lawyers, accountants and architects? Will your rent be taxed? How about home sales?

What kind of cap will there be on big ticket items? We don't want to drive consumers to buy tax-free on the internet or shop in nearby locations with lower taxes. But the lower the tax charged on big purchases, the bigger the break collected by more affluent consumers who can afford new cars and other pricey playthings.

Mayor Sullivan was elected with almost 57 percent of the vote. He'll need 100 percent of his election day support, and more, to push through a sales tax.

It's not impossible -- but if he can pull it off, it will be an impressive feat of leadership and salesmanship.

BOTTOM LINE: Don't take even odds on Mayor Sullivan pulling off this feat.

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