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Alaskan seniors fight for sales tax exemption

  • Sep 25, 2017 | Gail Cole

 One perk to aging in Juneau, Alaska: the senior sales tax exemption.

Some seniors in Juneau are fighting to expand the senior sales tax exemption, which was limited as of Jan. 1, 2016. Others vehemently oppose the idea.

Although Alaska has no statewide sales tax, the City and Borough of Juneau (CBJ) taxes a wide variety of goods and services, including accounting and legal services, automobile and boat repair services, barbershop and salon services, curbside garbage and recycling services, and internet and telephone services (both cell and landline). Clothing, grocery food, hot foods and restaurant meals, and paper products are also taxable. However, medical services and prescriptions are exempt for all Alaskans, as are charges for housing/rent and travel (airfare, ferry service).

Tax break for seniors — snapshot

Seniors in possession of a senior exemption card did not have to pay sales tax on any purchases prior to Jan. 1, 2016. Since that date, most seniors may only purchase essentials tax free, upon presentation of a senior sales tax exemption card. Exempt essentials are:

  • CBJ water and sewer utilities
  • Curbside garbage and recycling collection and landfill charges
  • Electricity (residential only, and only for the primary place of residence)
  • Grocery food (as defined by the Federal Food Stamp program)
  • Home heating oil and fuel

The exemption for non-essentials was retained only for seniors whose income is at or below 250 percent of the poverty level. In addition, qualifying seniors receive an annual hardship sales tax rebate of $325, “the estimated amount of sales tax paid during the year.”

The Assembly of the CBJ decided to limit the senior sales tax exemption because it was growing at an alarming rate, costing CBJ $2.8 million annually as of Oct. 2015. The growth has coincided with an increase in the senior population, which tripled from 6 to 18 percent in just a few years. As expected, limiting the senior exemption to essentials saved CBJ approximately $1.8 million in 2016.

Yet limiting the senior sales tax exemption wasn’t popular among certain seniors, and now the CBJ Assembly is considering expanding it once more.

A proposal to expand the exemption

If the Assembly of the CBJ adopts the proposed Ordinance 2017-19, as discussed during its Sept. 18 meeting, the senior citizen sales tax exemption would be expanded to include:

  • Household supplies
  • Personal care items
  • Prepared food sold for immediate consumption on or off the seller’s premises by an eligible retail food store (not a restaurant)

In addition, the hardship rebate would drop from $325 to $300 per year. The Assembly will hold a public hearing on the ordinance on Oct. 16. To see the ordinance, download the meeting minutes from 9.18.17 (City Hall Assembly Chambers).

Seniors for expanding the exemption

Juneau Seniors Supporting Seniors was created specifically “to influence the 2017 Juneau Municipal Election concerning Assembly seats and ballot initiatives.” Its members are determined to “get the full sales tax exemption back.”

The group was created, in part, because of a ballot initiative to extend a temporary 1 percent sales tax, which is currently set to expire Sept. 30, 2018. If voters approve Proposition 1, it would not expire until Sept. 30, 2023.

Ron Somerville of Juneau Seniors Supporting Seniors anticipates seniors will be a deciding factor in the upcoming Oct. 3 election because they now pay that 1 percent tax on purchases of non-essential items. He said there are “more than 4,000 seniors in town with sales tax exemption cards who have reason to come out and vote.” Many may cast a vote for Andy Hughes, an Assembly candidate who supports reinstating the full senior sales tax exemption.

Seniors against expanding the exemption based on 'squishy social criteria’

Yet not all seniors think the sales tax exemption should be expanded. The Juneau Empire recently published an opinion piece in which the senior authors argued that “reduction or elimination of sales tax for anyone or any entity should be based on smart policy and genuine need, not status, including age or any other squishy social criteria.”

The authors say they should help pay for the services they use, such as the pool. “If we can afford to chip in and pay for the myriad public services we use, why shouldn’t we?” Giving seniors a free pass simply because of their age is, they argue, “inconsistent with the best tradition of Alaska. In the Alaska we want to inhabit, everyone should carry their share of the load if they can.”

If the exemption is expanded, it will complicate sales tax compliance for many CBJ merchants.

Juneau isn’t the only locality in Alaska that offers a sales tax break for seniors. Learn more about this topic in Alaska is a good place to grow old.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.