You’ve just turned 65 and you’re retired in Sitka, Alaska, looking forward to one of the perks of being a senior citizen: your purchases are sales tax exempt. Well, unfortunately for you, the future availability of this perk is currently being re-evaluated by your local city officials. One Assembly member is in favor of raising the exempt age to 70, and another is proposing annual $300 sales tax rebates that are only applicable to purchases of necessities on the part of Sitka’s senior demographic. As the system stands, seniors are assigned a four-digit tax number and not only do they not need to have their “tax card” on them to evade sales tax charges, no further photo  identification is required. Jim Dinley, the Sitka Municipal Administrator, believes the system is rampant with abuse due to a recent shopping experience, during which the teller offered several times to exempt the tax on his purchase despite his repeated claims that he did not have a tax card.

This opinion begs the question: is Dinley’s experience a legitimate concern about the city losing revenue it deserves, or is it a convenient story that bolsters the validity of measures to generate money for a thirsty budget? If the city needs money, it’s best to be honest about why changes in sales tax legislation are needed. In this particular session, the subject of the city’s tax max amount was also up for debate; the Assembly wants to raise the max from its current limit of $1,000 to $3,000. In this time of economic recession, it’s widely understood that local and federal governments are cash-starved and therefore developing new ways to bring in the money (increasing fine and fee amounts, changing taxability rules, and proposing to raise sales and use tax rates ‘solely dedicated to education and health care’). However, Shirley Robards – a local business owner at this gathering – summed things up quite well from the public’s side:

“I know you have to raise money,” she said, “but I don’t think you have to keep hiring people at $104,000 a year, and give them $15,000 to move here, and lots of times their wives don’t like it here, and then give them a raise in six months if you’re happy with their work….”

In other words: cut back costs in City Hall before raising taxes. In our current economic environment, that perspective is sure to garner a lot of sympathy and support. To hear about how local sales tax landscapes are changing, stay tuned here at Avalara’s blog.