Borough to consider revising gas tax

The code review committee plans to address a potentially flammable issue Jan. 30.

The issue is gasoline, specifically a revision of a sales tax cap intended for fuel sales greater than $1,200. The exemption is intended to encourage large boats to fuel up in Wrangell, and also to provide help to local fishermen.

When Petro Marine Services purchased Wrangell Oil late last year, the company reviewed the ordinance and discovered a flaw, said Borough Clerk Kim Lane. Borough code Section 5.08.050 Subsection M lays out the exemption for “all sales of any single unit of which the price exceeds $1,200.” The problem is that a single unit of fuel is typically a gallon, as anyone who routinely pays at the pump knows, and local gas prices typically stay in the $4 per gallon range.

A fisherman or aviator buying $3,000 worth of fuel in the borough would pay the price of the fuel plus 7 percent sales tax on the $1,200 ($84), for a total of $3,084 if the ordinance were to function as intended. As the ordinance stands, the same fisherman would pay tax for the entire sale, or $3,210.

At least one fuel-intensive local business is feeling the pinch. Sunrise Aviation co-owner Dave Galla reckons his business has paid more than twice the amount of tax.

“I’m hoping they’re going to do an amendment to the code,” he said. “They’ll have to talk about it and discuss it.”

Sunrise maintains a 500-gallon tank it can fill up multiple times per month during the busy summer flight season, Galla said, and the exemption could be make-or-break for Sunrise.

“If they change that all, we can swallow and bear it for a month or two,” he said. “If it were left in place, it would cost us between $10,000 and $20,000 we can ill afford.”

“It’s just an oversight,” he said. “Hopefully it’ll be a non-issue.”