A ballot proposition on October’s Petersburg election ballot will ask residents whether they want to increase the amount of a purchase that is subject to sales tax.
Currently, Petersburg collects its 6% tax on sales of goods and services up to the first $1,200 on the invoice. Above that amount is free from the tax.
The proposed municipal code amendment, approved for the ballot in a unanimous vote by the borough assembly on June 17, would raise the taxable sales limit to $5,000.
If approved by voters, the maximum sales tax on a purchase would increase from $72 to $300.
The sales tax cap was established in 1959 and has been increased just one time in those 65 years, going from $1,000 to $1,200 in 2002.
Had it kept pace with inflation, it would be closer to $10,500, according to backup material prepared by Petersburg borough officials for the ordinance.
If approved by voters, the change would take effect Jan. 1, 2025.
Wrangell borough officials are studying a similar change in the law. Though they have briefed the assembly on the issue, they have not presented anything to the assembly for action.
Sales tax in Wrangell stops at $3,000. The borough estimates that the tax cap costs the municipal treasury about $900,000 a year in reduced tax revenue from larger purchases of goods and services that exceed the $3,000 taxable limit.
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