February 08, 2012
Wednesday AM

The boat tax (like sales and real property taxes) is levied by both the City of Ketchikan and the Ketchikan Gateway Borough.  The two bodies agreed several years ago to try to have coordination between the taxes levied so that the administration would be consistent on an area-wide basis.

Most people do not realize that under state law the Borough is the entity charged with actual collection of all local taxes levied by political subdivisions within its boundaries.  Thus when either the City of Ketchikan (or Saxman) levies a tax, the Borough sends out the bills, collects the taxes and remits the funds to the lower tier taxing government.

A couple of years ago, during my prior term on the Assembly, we determined that the Business Personal Property tax (a tax levied on property held by businesses to earn income) did not generate enough tax revenue for the Borough to offset the administrative headache it caused both for the taxpayer, who had to file a return every year listing all the property he owned in his business, nor for the Borough, who had to track it, bill it, and manage the whole affair.  The tax collected was eaten up in large measure by the management effort to collect it and it makes local businesses less competitive in the market, so we repealed it.

The City of Ketchikan opted to keep their BPP in place so the businesses inside City limits still pay the tax.

As for the boat tax, this tax is levied in a similar manner, by both the City and Borough.  Again, the City has expressed a desire to keep the tax in place and the Borough has not repealed its part of the tax to be consistent with past practice.

I have asked staff (and the Assembly) to consider a unilateral repeal of this tax by the Borough.  If they Assembly agrees, bye-bye boat tax (If you are subject to the borough tax).  The Borough can only repeal its own tax, though, so if you are subject to the City’s boat tax, you still get the privilege of paying.

The Borough has no authority to compel the City to repeal either its BPP or Boat tax, so it is up to the residents of the City to call their councilmembers and demand that they act.

It may be helpful to point out that in repealing the BPP, the Borough Assembly recognized the fact that we might have to raise real estate property taxes to make up for the revenue shortfall.  But fortunately, it has not been necessary to raise the mil rate because property values have increased (inflation and growth) and reserves have been sufficient to offset the missing BPP revenue.

Thanks, again for listening.

Glen Thompson
Ketchikan, AK

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