Skagway executives have declared a tax holiday this winter starting this Friday through April 1. This means that the municipality will not collect sales tax on retail products sold in the borough.
The state of Alaska does not levy a sales tax on retail purchases, but does allow municipalities to levy one as a means of collecting revenue. Skagway typically charges a 5% retail sales tax.
But this year they declared a sales tax holiday for half of the year. The concept of tax exemption is not new to Skagwegians, says Finance Chairman Jay Burnham.
âIt’s something we’ve been doing for years and years. And it’s usually a community thing just for the community, âBurnham said.
However, the tax holiday has not lasted all winter since 2016, and in 2020 there was none at all.
Finance committee member Orion Hanson at a recent assembly meeting said federal aid funds the municipality received earlier this summer made the tax holiday offer a no-brainer.
âI think we try to help people here in the winter as much as we can. And we also, in relation to this, unexpectedly received a lot of money from the ARPA funds that were spent on income replacement. And that has changed our financial situation a lot from where we were when we passed this budget, âsaid Hanson.
In a typical summer, hundreds of thousands of enthusiastic shoppers descend on Skagway after visiting cruise ships. This year, Skagway has seen that number drop to less than 10% of a typical season.
This means that there were less sales for local traders and less income for local workers.
Shawn Overstreet runs the Mountain Shop in Skagway, he says the tax holiday is good for everyone.
âI think it definitely makes a difference. Especially those years when it was a bit difficult financially for a lot of people. I think all the little savings you can rack up go a little deeper these days, âOverstreet said.
He also says one of the only issues with the tax holiday this year is that it’s not sure most people know what’s going on.
âI just found out from an email that arrived in stores last week. So I think I’m not sure what is being done to make it known to the public.
Kristen Wagner manages Duff’s Backcountry Outfitters, and she says the vacations help people who want to shop locally.
âI like to think that people are choosing to buy locally rather than online or something where they are charged tax now when there was none before. So I think that makes us more competitive. We notice people come on tax holidays, âWagner said.
She also says people tend to delay winter shopping until the tax holiday takes effect.
âPeople are stocking up on essentials, you know, they’re going to come and buy a bunch of underwear and socks and Levi’s,â Wagner said.
She said her parents were waiting until October 1 to buy a new Toyo stove for one of their company’s employee quarters.
Jason O’Daniel works at Skagway Hardware and says he expects more large orders after October 1st.
“100% some people will wait to place some of these special orders until we know you’re on sales tax holiday.” I know I take care of the furniture and appliances and that’s usually when I get the most special orders, âsaid O’Daniel.
He recently ordered a new gift for his back porch, but he’s waiting for the tax holiday to start before paying.
âI just ordered a smoker, yes a Traeger. So I’m going to buy it first, âO’Daniel said.
It is not yet known when the first rack of ribs will be ready. The sales tax holiday begins this Friday and ends April 1, 2022.