Proposed Sales Tax for Borough in Place of Property Taxes

Mat-Su Borough District 1 Assemblymember Michael Bowles introduced a proposed 6.5% sales tax that would replace the current property tax Borough landowners pay. The legislation is proposed to be a ballot measure in this fall’s election on November 3. It was introduced at this week’s Assembly meeting.

The informational memo accompanying the proposed legislation says that the intent is to capture a wider tax revenue source rather than rely on residents paying property taxes. It also means the Borough could capture tax revenue through more transient sources like tourism, hospitality, and entertainment as well.   

According to Borough Manager Mike Brown, the estimated annual income from a 6.5% sales tax is about $121 million. But annual property taxes bring in $130 million to $150 million. Brown says there is a margin of error since they do not have historical sales tax data to rely on. But he says they project a 7% sales tax would be about the same amount that property taxes bring in for the Borough.   

The proposed legislation would apply area-wide and does not exempt any existing sales taxes currently collected by the cities in the Borough. If the legislation moves forward as written, real property taxes would no longer be collected and would be replaced by sales taxes instead. Residents would have to approve the measure this fall at the ballot box. 

Residents can expect the Assembly to discuss the legislation at the May 19th hearing.