HOMER,
Mayor
Hornaday, Stark
RESOLUTION 07-44
A RESOLUTION
OF THE
WHEREAS,
the Kenai Peninsula Borough (KPB) is proposing increasing its sales tax rate 1%
from 2% to 3%; and
WHEREAS,
this increase would be additive on the City of
WHEREAS,
the present 6 1/2% sales tax rate in Homer (along with Seldovia's
6 1/2%) is the highest sales tax rate in KPB
WHEREAS,
it is generally acknowledged that a 6% - 6 1/2% rate is the highest a large
number of people will pay without substituting purchases in lower-rate
jurisdictions; and
WHEREAS,
although they are slightly lower than Homer's rate, Kenai and Soldotna have the
same problem of substitution and are closer to Anchorage with its 0% sales tax
rate; and
WHEREAS, while few people will drive to
Anchorage just to shop and avoid sales tax, many people routinely go to
Anchorage for other reasons and shop while there; and
WHEREAS,
while 1% does not seem like a deal-killer in shopping, in fact many people so
resent a high sales tax that they will reduce their purchases in KPB; and
WHEREAS,
the income to KPB and the cities from increased taxes is not proportional
because of shoppers' marginal propensity to shop locally; it could in fact result
in decreased income to KPB and the cities; and
WHEREAS,
low-income residents are particularly hard hit by high sales taxes; and
WHEREAS,
because of the information in the foregoing clauses, a reduction in local
purchases will cause some merchants to lose sales and money and may be forced
to close their doors, and
WHEREAS,
KPB's imposition of an increased sales tax may result
in both a referendum on it and initiatives in both KPB and the cities to exempt
food sales, all of which would probably succeed and would result in an absolute
financial crisis in both KPB and its cities.
_____________________________
JAMES
C. HORNADAY, MAYOR
ATTEST:
______________________________
JO JOHNSON,
Fiscal Note: Not defined at
this time.