Gross Receipts Tax Initiative
for Charter Amendment

SUMMARY OF CHARTER AMENDMENT

SHALL THE CITY OF FAIRBANKS PUT A SELF-ADJUSTING GROSS RECEIPTS TAX OF 0.250% (ONE QUARTER OF ONE PERCENT) IN THE FAIRBANKS CITY CHARTER WHERE IT WILL BE LIMITED BY THE TAX CAP AND WHERE THE COUNCIL CANNOT SUBSTITUTE OTHER TAXES AT WILL

WHEREAS the voters in October 2006 lowered property taxes for the property owners of the City of Fairbanks to .05 mills, causing a $10 million shortfall in city revenues – considerably more than can be covered with cutbacks alone, and

WHEREAS the Interior Taxpayers Association, Inc. fully supports the right of the people to determine how much government they want as well as how they want to pay for that government and

WHEREAS the city’s response to the voter’s attempt to lower the tax burden on homeowners and better distribute the tax burden was to institute onerous taxes that put the burden back on homeowners as well as seniors and other low-income citizens, and fees that circumvent the city tax cap and

WHEREAS the Interior Taxpayers Association, Inc. has never opposed taxes, but believes in taxes equitable for all, limited by the tax cap and

WHEREAS spreading the tax base to businesses that rent, and are therefore not presently in the tax base will make that tax base broader, thus lessening the tax for everyone and

WHEREAS real property-owning large businesses run by absentee landlords compete unfairly with small local businesses and

WHEREAS the ballot proposition that passed drastically lowered property taxes that were proportionately paid mostly by those large land-owning businesses, leaving the City to absorb the shortfall and

WHEREAS the City of Fairbanks has failed to establish any kind of an equitable tax to replace the lost revenue, but seems instead bent on punishing the homeowners who were supposed to benefit by the tax rollback and

WHEREAS the Interior Taxpayers’ Association, Inc. has determined that one tax, a gross receipts tax exempting non-profits, that adjusts itself to the constraints of the tax cap, will best serve the citizens of the City by spreading the tax base, impacting businesses least by requiring only calculations of a small percentage of gross receipts already determined for federal tax purposes and collected bi-annually, because of its potential to bring in enough revenue to replace former property tax income without requiring other new taxes.

THEREFORE the Interior Taxpayers’ Association, Inc., wanting to allow the citizens of Fairbanks to be part of the solution by their vote, do submit the following charter amendment:

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Section _.1. Imposition of Self-Adjusting Gross Receipts Tax

(a). There is hereby levied upon and shall be collected from every person a tax on business activities within the City in the amount of 0.250% (one quarter of one percent). Unless specifically exempted in this ordinance, all business enterprises of any nature are subject to this gross receipts tax.

(b). Taxes herein levied upon persons engaging in business may not be construed as taxes upon customers or purchasers of goods or services. Taxes shall be levied upon, and collectible from, the person engaging in the business activities herein designated and such taxes shall constitute a part of the operating overhead or cost of doing business of such person.

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Section _.2. Self-Adjusting Provision.

The Self-Adjusting Gross Receipts tax shall be subject to the limitations of the tax cap. The percentage of gross receipts collected may decrease or increase after 2007, but the revenue it generates may at no time exceed the limits of the tax cap.

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Section _.3. Gross Receipts subject to tax.

(a). For taxpayers making all of their sales inside the City, all of the taxpayer’s gross receipts shall be used in determining the amount of the tax. For taxpayers providing some services incidental to sales, the gross receipts shall be considered made where the sale takes place.

(b). For taxpayers making some sales inside the City limits and some outside the City limits, all of the gross receipts attributable to sales inside of the City limits shall be subject to the tax.

(c). For taxpayers whose gross receipts are attributable primarily to services rather than to sales, all of the gross receipts attributable to services performed inside of the City limits shall be taxed.

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Section _.4. Exemptions.

(a) Any person exempt from the tax pursuant to any applicable federal law or constitutional provision, or state law or constitutional provision.

(b) Any nonprofit corporation or organization operating for educational, civic, charitable, or religious purposes, provided that if any such nonprofit corporation or organization has any business income unrelated to the nonprofit work of the nonprofit corporation or organization, such unrelated business income shall be subject to the tax.

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Section _.5. Administration.

This tax shall be subject to enforcement rules, regulations, penalties and interest as prescribed by the City and approved by the City Council.

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Section _6. Payments & Returns.

(a)   Each taxpayer required to pay a gross receipts tax shall file a return on a bi-annual basis. The return shall be accompanied by payment of the gross receipts tax due, covering the preceding six months. Yearly, the first return and payment shall be due the fifteenth (15^th) day of January and cover taxes for July 1 through December 31 of the preceding year. The following bi-annual return shall be postmarked by the fifteenth (15) day of July and cover January 1 through June 30 of the current year.

(b)  If the due date is a Saturday, Sunday, or a federal, or City holiday, the due dates shall be extended until the next business day.

(c)   Failure to receive a return form from the City in the mail shall not relieve the taxpayer of the obligation to obtain a form from the City and file in a timely manner.

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Section _.7. Transitional Provisions.

(a) Notwithstanding section _.5a, taxes for 2007 shall accrue beginning the day after the election is certified, with the first tax return and payment due 15 days after the last day of that half year (either July 15, 2007 or January 15, 2008).

(b) Thereafter, returns shall cover a full half year.

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Section _.8.     Severability.

If any part of this ordinance is held to be unconstitutional or in violation of law, then that holding shall not affect the validity of the remainder.

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Section _.9.     Definitions.

As used in City of Fairbanks Charter section _.1 through _.8, the following definitions apply:

1.     “City” means the City of Fairbanks.

2.      “Gross Receipts” means all of the money received by any taxpayer from persons doing business with such taxpayer, but not including the following:

a.      Money received only in trust, investments, loans, or escrow funds

b.     Money the business has not right to keep in receipt, such as funds due to be transferred by a realtor to the seller of property, by an agent to the principal, by an attorney to a client, or by an operator of licensed charitable gaming.

3.     “Person” means any individual, corporation, Limited Liability Corporation, partnership, Professional Corporation, labor association or union, or other business entity.

4.     “Taxpayer” means any person required by this ordinance to pay any tax or to file any return or report. Any person whose activities require a business license by virtue of statutes of the State of Alaska is deemed to be a “taxpayer” under this ordinance if money is received from activities inside the City of Fairbanks, regardless of the physical location of the taxpayer.

5.     “Bi-Annually” means twice a fiscal year, encompassing 6 months unless otherwise described herein.

6.      “Return” means the excise tax report form on which gross receipts shall be reported, which shall be supplied by the City.

7.      “Timely” means postmarked by the due date.

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Section _.10.   Effective date.

This ordinance, upon approval in a special City Election in 2007, shall be effective on certification of the election.

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Ballot Summary and Question. The ballot summary shall read as follows:

SHALL THE CITY OF FAIRBANKS PUT A SELF-ADJUSTING GROSS RECEIPTS TAX OF 0.250% (ONE QUARTER OF ONE PERCENT) IN THE FAIRBANKS CITY CHARTER WHERE IT WILL BE LIMITED BY THE TAX CAP AND WHERE THE COUNCIL CANNOT SUBSTITUTE OTHER TAXES AT WILL