Mat-Su Borough residents may soon relegate their property taxes to the dustbin of history.
The Borough Assembly introduced a ballot measure proposal that could largely eliminate increasingly burdensome property taxes and replace them with the region’s first-ever boroughwide sales tax (set at 6.5%).
Assembly member Michael Bowles formally proposed the idea during the March 3 Assembly meeting in Palmer. It would repeal the borough’s areawide property tax – currently set at 8.485 mills (or $849 per $100,000 of assessed value) – and shift the tax burden to a much broader base that includes visitors, non-residents and online shoppers.
“I hate property tax and one of my goals on the assembly is to get rid of them,” Bowles said over the phone on March 2. “I’m of the opinion that of all things we have, as Americans, we have our home. Your home should never be infringed upon. That’s your place in the world, and the government should not be able to take it from you.”
According to a memo about the proposal, property assessments are skyrocketing, making the tax burden “two, three, and sometimes four times more than recent years.” This imposes “an overwhelming burden” on property owners rather than “spreading the tax burden evenly across all aspects of activity throughout the entire Borough,” the memo states.
All those people who recreate here from Anchorage are going to be contributing to the borough before they drive out of the borough and go home. – Assemblyman Bowles
Bowles ordinance is expected to generate around $121 million in areawide revenue, which he says is plenty to fund essential borough services.
The sales tax would apply to most purchases, including online sales, but it is capped at the first $1,000 of any single transaction. Current exemptions include pharmaceuticals, animal feed, and bank fees. Additional carve-outs could be added before a final ordinance is agreed upon. Additionally, Bowles plans to introduce an amendment that would exempt seniors and disabled veterans – groups that currently receive property tax exemptions.
The proposal would also replace existing borough taxes on marijuana sales and hotel/motel/vacation rentals. However, it would not eliminate smaller non-areawide property taxes (about $37 per $100,000 in property value for those who live outside city limits). Nor would it do away with local service area taxes for roads and fire protection.
Proponents of the idea say it promotes fairness by capturing revenue from tourists and others who use borough services but currently pay little to nothing for them.
“If you look at the growth in the borough, it really makes sense to change the way we are being taxed,” Bowles noted. “All those people who recreate here from Anchorage are going to be contributing to the borough before they drive out of the borough and go home. Capturing that revenue source is huge for those who live here.”
One challenge, however, may come from residents attempting to avoid the sales tax. According to a borough Finance Department analysis the adoption of a borough-wide sales tax could cause Mat-Su residents to purchase more goods in Anchorage, where there is no sales tax except for specific items such as alcohol, marijuana products and gasoline.
This phenomenon, which is called “elasticity,” has already been factored into the proposal, including the projected sales tax revenue, Bowles said.
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Additionally, the borough sales tax would be on top of existing city sales taxes. Palmer currently has a tax of 3% (soon to be 4%), while Wasilla has a 2.5% sales tax.
For those who worry that a new borough sales tax might gradually increase once it is initially approved, any future rate changes would require another voter-approved ballot measure.
If the Assembly approves the tax ordinance before this coming August, Mat-Su voters could decide its fate in the November 2026 general election. If passed, it could take effect in 2027.
Before voting on whether to send the measure to Mat-Su voters, Bowles wants to give residents a chance to learn more about the proposal through open houses and other forums, which he hopes to facilitate in the coming weeks.
“This is the first time in borough history that we would move to remove property tax and replace it with a sales tax,” he said. “This is big. This is going to fundamentally improve our quality of life out here in the borough. I really want people thinking and talking about this.”
TAKING ACTION
— Click here to read a brief summary of the proposed ordinance.
— Click here to read the ordinance.
— Click here to see graphics on the proposed sales tax.
— Click here to learn more about how borough property taxes currently work.
24 Comments
I am very intrigued and want to learn more. I also “hate” property taxes and having a paid off home essentially held hostage. Property taxation has been the primary way local governments have been funded since statehood so it would be a pretty big paradigm shift. Michael Bowles is the new assembly representative in my assembly district and has certainly jumped in with both feet. I commend his courage!
“……..“I’m of the opinion that of all things we have, as Americans, we have our home. Your home should never be infringed upon. That’s your place in the world, and the government should not be able to take it from you.”………”
Agreed. But what about food? That’s every bit as basic as a home, and you can’t rent food. No exemptions for unprepared food? Will we pay sales tax on utility bills like electricity, natural gas, and phone service? I’m pretty sure you aren’t proposing something that is going to result in less revenue, so I did a bit of math here. It’s looking to me that I’m going to be taking a hit, so the promise that non-residents and visitors will help pay is of little solace (oh, BTW, I was surprised to learn that an estimated 3% of private real estate is owned by non-residents or aliens in Alaska). I tend to be extremely skeptical of gift horses, so I’m almost certain to vote against this measure.
Why don’t you actually read the proposed ordinance before you’ve decided you’ll vote against it? Sales tax is not compulsory if you don’t make purchases. Property tax is compulsory and doesn’t care what you buy, spent or at what level your income is.
You don’t replace one tax with another. Property taxes are legal serfdom that should never have existed. A sales tax on top of inflation where you are hit with it EVERY TRANSACTION is not an answer. May just be the thing I need to look outside Alaska. if I have to pay a sales tax, there’s not a real valid reason to stay up here anymore when I could enjoy better winter weather.
Will, you seem confused. This would INDEED replace one tax with another. That’s actually the entire point because Property Taxes are permanent serfdom to the profligacy of government bureaucrats. Don’t like what they tax you, tough, you can appeal but it WILL be denied. This spreads taxation to EVERYONE instead of just property owners, this hits tourists, travelers, and renters equally. This actually shares the tax burden with everyone, and in one stroke will make the MatSu one of the most desirable communities in America. Look at your property taxes, take that number and divide it by .065 and that is how much “STUFF” you have to buy in a given year in order to equate to the same amount, and right now MASSIVE amounts of money flow through with no benefit to the people who live here. I would agree that you never ADD a new tax while reducing another, but eliminating one for the other not only spreads the burden across the spectrum, it will actually LOWER most home-owners paid tax, in addition to giving many, MANY retired people the ability to actually OWN their own home. I can’t see a sane argument against this proposal.
Jake, thank you for putting the math problem out there. I would have to buy about $77,000 worth of stuff to equal my property taxes. That’s more than my net income for the year.
We already pay city sales taxes, even though we are well out of Wasilla. My property taxes are very low, and I don’t mind paying them. A sales tax reduces our income, drastically, and it will never stay low. There will always be a “reason” to raise it.
Tamra, your argument NOT to adopt this idea is predicated that we aren’t ALREADY in the predicament where government just raises and raises taxes which is what is happening now. There will always be a reason to RAISE your property tax valuations insanely high and/or millrate, and again, if you are working, renting, or “touristing here” you contribute nothing while clogging the roads and parks. The real difference is this spreads the burden across the spectrum and makes everyone in-effect, pay, but also pay less. I’m glad your property taxes are low, but they’d have to be insanely low to equal division by .065 not equating to less than what you spend on “stuff.” It would be a welcome change, and would allow the dream of home ownership – ACTUAL ownership become achievable. Not to mention the tertiary benefit of making this place one of the most desirable places in the nation to live in, the day this passes.
“……..if you are working, renting, or “touristing here” you contribute nothing………”
When I rented properties I charged enough rent to pay the costs, including taxes. Renting for less than costs is renting at a loss, which isn’t a good business plan. If you don’t know that, maybe you aren’t the best salesman to sell this new tax.
Tax, should be based on consumption, a one time thing, not continual on something you own, that’s called theft.
Wonder how that exemption would work for seniors and veterans?
The thing to watch out for is Income tax, once you let Juneau into your personal finances, they will find the way to audit and harass political opponents, much the way IRS.
Bad enough our courts are already doing it.
Hmmm. Aren’t they trying to exempt the LNG pipeline from having to pay property taxes? This seems very coincidental.
Who says the LNG will be coming this way to Anchorage? Wake up and quit selling yourself short on your own dollar that goes into your pocket. The pipeline is simply a shout from failing government and a failing sponsorship of pretend financing that hasn’t happened and won’t. The companies run around waving a letter in the air and marketing as much wind as it takes to fly a kite. Take a chance to take care of no tax on your home and save for your family and yourselves. Anchorage and other boroughs should look in the same direction and do some research and serious thinking. Property taxes have gone wild and exceedingly high and no one seems to know why or have an inkling of what happened to create such a high tax on your home and business.
It’s a good thing that nobody’s dumb enought to believe the one-tax-replaces-another BS.
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Sales tax rises to eight or ten percent, education industry starts demanding (and getting) more, you don’t think property taxes’ll come back like cancer after remission, and just as incurable?
Sadly like all politicians they never seem to keep their word and talk in circles. They will never remove our property taxes no matter what other taxes they levy. It is always the same old lame promises that never happen.
Reggie Taylor, i’ve never rented out property and I’m glad you were able to charge enough to cover costs for your rentals. I think the flaw you have is that it’s not guaranteed the owner will be able to charge for an increase in property taxes because they’d have to wait for the contract to come up to raise the rent and they would also be subject to market forces. I think eventually the owner would be able to charge enough to cover property taxes(assuming they went up significantly) but it’s not guaranteed they could do it soon enough without taking a loss on it.
I hope you all realize 2/3rds of your property taxes go to the school district. Now the school district is whining it’s 23 million in the hole. We don’t mind paying the tax, but we do mind when our bring-home income doesn’t increase as taxes increase. When that happens, the burden becomes harder to bear and cuts into our lifestyles. Government is supposed to work for us, not us work for the government, IE- tax slavery.
The proposal is intriguing while the reality is far less comforting. History suggests that once a new tax is introduced, it rarely replaces the old one. It simply joins it. The promise is that sales tax will stand in for property tax. But when the revenues fall short, as they so often do, the likely outcome is predictable; the property tax returns, the sales tax remains, and citizens are left carrying the weight of both. What begins as a trade becomes an addition. In the end, the burden does not shift, instead it grows.
Past 5 percent sales tax it will be worthy to start cheating. In my old country sales tax is 20 percent and everyone and his cousin is cheating. Property taxes will save most money to big property owners, you know, “the rich”. My major complain about property taxes always was that government could sell your home over 3,000 bucks in taxes due for peanuts. The government should only be able to put lien on your house for when OWNER sells it, they get what you owe, like when you get back from hospital or war or prison whatever. Sales tax would have to be 5% or less, uniform for all people but possible except items like bread, butter and milk … for those “poor” among us.
Either way, we need to find incentives for encouraging more people to engage in responsible home ownership; — which promotes more stability and “vested interest” in the local community.
Property taxes are like organized crime. You are provided some services (you may or may not utilize) and protection (assessing dept says they protect our property value) as long as you pay what’s asked of you, although you have little to no say in what that amount will be. It’s based on sales of comparable properties. I have zero ability to control that. Also, my property taxes are NOT in any way based on my income level. It’s arbitrary and punative. The irony is that the same entity you paid to protect and serve you is the very same entity that will take your property by force for your inability to pay up. This proposed ordinance retains the borough’s legal ability to seize your “seller” property for non payment. This proposal is like putting lipstick on a pig.
“……..Sales tax is not compulsory if you don’t make purchases………”
Do you eat? The only people who don’t pay property taxes are the homeless. If you’re a tourist and visit Alaska, unless you stay in a tent, you rent lodging, and the person you rent lodging from uses your payment to pay property taxes. Commercial buildings? They pay property taxes. Grocery stores? Ditto. Manufacturing buildings. Yup. Property taxes. Lawyers offices? You guessed it. They pay, even if it’s a leased office. Restaurants? Yup. Even Native Corporation buildings in Anchorage and not on Native lands pay property taxes. You asked me to “think about it”. I did. Years ago. This isn’t my first rodeo with this stuff.
“Current (Mat-SU sales tax) exemptions include pharmaceuticals, animal feed, and bank fees.”
So your government is more concerned with affordable feed for cattle and pigs than affordable groceries for human beings? WOW! I guess the farmer lobby is very strong up there. And pharmaceuticals and banks fees of greater import than food for human beings? Where I grew up (non-prepared) food, (non-luxury) clothing, and shoes were exempt because they were considered essential for all human beings – basic utilities would also make sense. Such exemptions would especially benefit low income folks. And of note, living on the Kenai Peninsula I go out of my way to NEVER purchase any goods and services from high sales tax cities such as Homer and Seward and reserve as much of my purchases as possible for no-sales tax Anchorage. But the bottom line is public education is devouring everyone’s substance here in Alaska. Not only is it devouring everyone’s PFD on the state level but it’s devouring two-thirds of your tax dollars on the local level. Until we learn to tame the insatiable public education beast we will all be much poorer whatever form local taxes take. Our educational system is completely out of control, costing too much and yielding too little, and this is coming from a father of 12 children. Ninety percent of a person’s lifetime education takes place outside of the four walls of a formal school. We need to stop mindlessly throwing money at public education (and this applies to publically supported health too). We can talk all we want about shifting tax burdens, but the real discussion should be about making sacrosanct public education (and public health care) radically leaner and meaner.