Starting April 1, according to a document from the City and Borough of Wrangell, the cap on sales taxes for single purchases has been increased from $1,500 to $3,000 or above. According to Finance Director Lee Burgess, this means that the sales tax for single purchases of $3,000 or more are capped at seven percent of $3,000, or $210. Any large purchases made after the beginning of April will have the new cap, while purchases before that date still have the old cap applied to them. Burgess emphasized that this only applies to single purchases in the amount of $3,000 or more, such as a car or boat, and not multiple purchases that total to $3,000 or more.
"Any purchases that were initiated after April 1 should have the new rule applied," he said.
The cap will also be computed on a monthly basis. The document provided by Wrangell gives an example to show how the altered
sales tax cap will work. A customer hires a contractor to complete a job for $5,000, which takes place over a two-month period. If the
contractor completes $4,000 of the job in the first month, the customer will then owe the $210 sales tax cap for that month. The final $1,000 of work in the second month will incur $70, or seven percent, in sales tax.
Burgess said that the city decided to raise the sales tax cap because of financial necessity. Wrangell has been taking on more and more expenses over the years, he said, in the form of wages, facilities, and other expenses. Meanwhile, the borough has also been seeing less money coming from the state government. This increase in costs and decrease in revenue meant that they needed to find some way to bring in money. Burgess said that he could not give an estimate on how much tax revenue this change will bring to Wrangell, but money is expected to come in.
"I know it'll bring in more money," he said.
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