Juneau takes another look at senior sales tax breaks
September 1, 2017
Juneau seniors may pay less at the cash register as the Juneau Assembly seeks to expand the list of essential items included in the city’s senior citizen sales tax exemption. Assembly member and ordinance sponsor, Mary Becker, hopes that including necessities like toilet paper, paper towels and facial tissue, personal items like shampoo, soap, and toothpaste and prepared food items to the list of essentials already exempt from the tax will increase essential services for seniors.
“We decided we need to expand exempted items to make it more palatable and less punitive for seniors,” said Becker.
As a result of the addition of new items to the exemption, the hardship rebate will be reduced from $325 to $300.
“The hardship rebate that lower income seniors receive in September will need to be reduced if we include these new items,” explained Becker.
Although the newest changes to the exemption call for an expansion of essential items, the changes call to mind the September 2015 reduction to the senior tax exemption, says Assembly Finance Committee Chair Jesse Kiehl.
“The rule used to be that when you turned 65 you received your exemption card, and seniors were eligible for exemptions on things like furniture, clothing and eating out at restaurants,” said Kiehl. “This exemption costs us $1 million annually, and our senior population increases every year. In order to sustain the program, we had to make unpopular reforms, and now, the exemption only covers the essentials - water, fuel, electricity, heating, garbage collection and groceries through SNAP.”
Prepared food is defined by the ordinance as “food that is sold in a heated state or food that is heated by the seller.” The proposal separates prepared food merchants from food purchased at restaurants by stating that stores making less than 20 percent off their prepared food sales out of their total sales are eligible to offer seniors the exemption. Merchants must also annually certify that their percentage of prepared food sales is less than 20 percent of their gross sales.
“Here’s the problem,” added Kiehl. “Someone who goes to Safeway and orders a sandwich would not pay sales tax because Safeway makes less than 20 percent of their total sales off of deli sandwiches. Now, someone who goes to Subway and orders the exact same sandwich will have to pay the tax because Subway makes more than 20 percent of their sales off their sandwiches. That’s not good tax policy, and it’s not fair treatment to businesses.”
As the ordinance sponsor, Becker feels that the addition of prepared food will benefit seniors who need extra help in the kitchen.
“I feel like seniors should be able to bring home hot chicken and not have to cook,” Becker said. “It’s also a safety issue for seniors that can’t do those things on their own.”
The addition of paper products and personal items gives seniors the opportunity to receive their exemption for other everyday items that the current exemption is missing.
“It’s ridiculous that toilet paper, for example, is not exempt,” Becker said.
However, non-essentials like cosmetics will not be exempt, leading to more concerns by the Finance Committee on which items will count for the exemption at the register.
“What’s the difference between toilet paper and a flushable wipe? One is more money? One is nicer? Is the wipe even paper?” said Kiehl. “A federal program is used to determine the definition of these goods. As someone who is familiar with tax policy, I know what this means, but someone at the register needs to know where the fine line is.”
“There is nervousness about the categories being too broad, but I believe seniors and merchants will understand,” said Becker. “If the merchant makes a mistake and doesn’t charge the tax, it won’t hurt the merchants or seniors. It would hurt the city, but it would only come out to be a $30,000 annual loss at most in the end.”
The ordinance was officially introduced to the Assembly on Aug. 21 where it will see more changes and revisions before the public has a chance to comment at a later Assembly meeting.
“We haven’t set a date for that second meeting yet,” said Kiehl, “But we should expect lots of emails and phone calls for this. We shouldn’t expect people to be quiet on this issue. That’s one of the benefits of public comment -- you get to hear a point of view that you might have missed.”
“I hope if there are any violations that we can fix them during the Assembly meetings,” added Becker. “I really do hope it will work out because it’s important and logical to give these essential services back to seniors.”