Assembly introduces sales-tax changes on building materials and cruise-ship purchases, tightens nonprofit exemptions; referred to commerce committee

The Assembly introduced an ordinance on Oct. 28 proposing multiple amendments to Haines Borough Code chapter 3.8 (sales tax). The proposed changes would raise the annual building-materials exemption from $5,000 to $20,000, apply borough sales tax to purchases made on cruise ships while in borough waters, and limit nonprofit sales-tax exemptions so they apply only where income from the exempt sale is itself exempt from federal income taxation.

CFO Stuart explained practical examples the ordinance would affect, noting that nonprofits sometimes rent space to for-profit vendors at community events (for example, fair vendors) and that the current exemption can create an uneven playing field: “When someone buys something from Haines Animal Rescue Kennel they may not pay sales tax, but when they buy the same item from a downtown shop they do,” Stuart said, arguing the change is intended to address that imbalance. The packet also included comparative language drawn from Skagway code.

Assemblymembers expressed differing concerns: some urged referral to committee to allow industry and nonprofit stakeholders time to review impacts and numbers; others warned that a cruise-ship passenger-vessel tax raises legal and administrative complexity. After discussion the Assembly voted to refer the ordinance to the commerce committee for further deliberation and public input.

Next steps: The ordinance will return to commerce committee for additional analysis, stakeholder outreach and potential re-drafting before a public hearing and formal vote.