The Nome City Council is moving forward with a plan to repeal sales tax exemptions for local churches and nonprofits in an effort to increase city coffers.
A recent article by KNOM.org reports that with the city budget projected to run a deficit, the council plans to move forward with an ordinance to remove sales tax exemptions from more than 40 local nonprofits including St. Joseph Catholic Church and 10 other churches. The city estimates the move will bring it an added $300,000.
If the proposal passes, Nome would force its churches to pay sales taxes.
Historically churches have largely been exempt from most forms of taxation, including most state and municipal sales taxes, state property taxes and federal income taxes. This comes in part due to the determination that churches serve their communities, believers and non-believers alike through homeless shelters, soup kitchens and myriad other outreaches.
In Alaska there is no state sales tax. But in states that do impose a sales tax, most exempt churches by allowing them to show an exemption certificate to the seller upon purchasing goods.
Washington State, however, is an example of a state that requires churches to pay state sales taxes when purchasing goods and services.
In Alaska, individual towns, including Nome, can and do impose sales taxes. But like many places with a municipal sales tax, Nome has long exempted churches by issuing exemption certificates which the church representative can present at the time of purchase.
If Nome follows through with its proposal, the town would begin siphoning sales tax revenue from the churches in order to redistribute the money to city agencies.
According to the article at KNOM.org, Councilman Matt Cully said the city could always return money to churches and charities if it turned out that the city didn’t need the money.
“When we sit down at budget time, [with] the numbers to look at, if we want to donate that [money back to nonprofits], the money can go all back in,” Cully said, “but we have control over it now, as opposed to it going whatever direction that we have it going now.”
The proposed tax change in Nome is still just a proposal and several more public meetings will take place before a final vote.
The next opportunity for the public to speak out on the proposal will be at the city council meeting on Monday, Nov. 24 beginning at 7 p.m. More information is available online at nomealaska.org.