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Date Posted: 13:31:13 05/27/04 Thu
Author: Don Johnson
Subject: Sales Tax Alternative

Dear KPB Assembly Members

I would like to address the Kenai Peninsula Borough, KPB sales tax issue.
I would also like to address the way the KPB defines "fairness within this issue".

There are currently two classes of KPB business, those which pay their fair share
of KPB sales tax and those who do not. Both business types may earn millions of
dollars within the KPB but both do not pay a KPB sales tax. Both may enjoy the
many benifits generated by a KPB sales tax but both are not required to pay their fair
share to obtain those benifits.

The type of business which currently is not required to pay its fair share of our
KPB sales tax is any business which can figure out a way to sell their products
outside the KPB. These businesses may earn as much or even more income than
those who sell their products within the KPB but they basically evade a KPB sale tax.
My question to Mayor Bagley over our current sales tax system is,

" If the KPB needs an additional two million dollars because of increased costs,
why not get those revenues by changing our current sales tax system to include
those who are currently making millions of dollars doing business within the KPB
but pay little to no sales tax?"

It would seem very desireable to first spread the sales tax burden evenly to all
KPB businesses and after that is done then consider increasing the tax .
My suggestion to better spread a KPB sales tax burden is as follows.

Change the current KPB sales tax system to be more income sensitive.
This could be done by changing the current KPB sales tax system to
also include products which are exported outside the KPB.

I asked Mayor Bagley to take a look at this revenue alternative and let me know if he agreed or disagreeded with the concept behind it.
I asked the Mayor to evaluate this concept within three different letters.
The only response which I received was for him to explain why the KPB need more money.
I requested feedback on my alternative and basically received none.
The Mayor appears to be convinced of two things:
1.] That it is impossible to cut KPB spending.
2.] That it is impossible to expect KPB business exporters, to actually pay their fair share of a KPB sales tax.
The Mayor went to great length attempting to explain how the KPB requires additional revenues
but he would not address the revenue alternative I have proposed. The only feedback I received from
the Mayor over sales tax alternatives was " you are free to attempt to convince the Assembly of the merit of such a change to the curent KPB sales tax system.".
This is the reason I have sent you this letter, the KPB Mayor does not even want to explore alternatives to increasing our current KPB sales tax.
The Mayor has proposed increasing our current sales tax system and he is not open to discuss alternative. He is very open to explain why the KPB requires more revenue but he is not open to discuss alternatives method to collect that revenue.

It is my belief that when you limit the scope of a discussion you have in fact attempted to push your own agenda. I therefore feel that the Mayor is pushing some kind of personal agenda within his limited discussion regarding increasing KPB revenues with his desired sales tax increase.
I feel that there are KPB revenue alternatives beyond the "tax and spend" one selected by the Mayor.
I do not believe it is fair for the KPB to only tax businesses who sell their products within the KPB.
I feel that it is very possible to also expect KPB business exporters, to actually pay their fair share
of a KPB sales tax.

----------------------------
HOW IT COULD BE DONE

The KPB could allow its businesses to select what type of "sale tax plan" they will be on.
The KPB could offer two plans:

a.] If a business expects to sell its product within the KPB it could pay a 2% KPB sales tax.
b.] If a business expects to sell its product outside the KPB it could pay a 2% KPB export sales tax.

This kind of KPB sales tax change could provide at least four very positive points.
1.] Help encourage KPB businesses to sell their products within the KPB.
2.] Help make the KPB sales tax system appear to be more fair.
3.] Help generate many millions of needed KPB revenue dollars.
4.] Help the KPB avoid increasing its current sales tax cap or percentage.

Thank you for taking the time to read my KPB revenue alternative.
I hope this alternative make sense to you, please send me any feed back you may have.


Don Johnson
Soldotna, Alaska
ccpwow@gci.net

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