Skagway shopping district. Photo by K. Rain.

Skagway leaders have declared a tax holiday this winter starting this Friday and running until April 1. That means the municipality won’t collect sales tax on retail goods sold within the borough. 

The state of Alaska doesn’t charge a sales tax on retail purchases, but it does allow municipalities to charge one as a means of collecting revenue. Skagway typically charges a 5% tax on retail sales.

But this year they’ve declared a sales tax holiday for half the year. The tax holiday concept isn’t new for Skagwegians, says finance chair, Jay Burnham.

“This is something we’ve been doing for years and years. And it’s usually a community thing just for the community,” said Burnham.

The tax holiday hasn’t lasted the entire winter since 2016, however, and in 2020 there wasn’t one at all. 

Finance committee member Orion Hanson, during a recent assembly meeting, said that federal relief funds received by the municipality earlier this summer made offering the tax holiday a no-brainer.

“I think we’re trying to help people here in the winter as much as we can. And we also, in relation to this, unexpectedly got a great deal of money from the ARPA funds that went into revenue replacement. And that’s changed our fiscal situation quite a bit from where we were when we passed this budget,” said Hanson.

During a typical summer, hundreds of thousands of eager shoppers descend upon Skagway from visiting cruise ships. This year Skagway saw that number drop to less than 10% of a typical season.

That means there were fewer sales for local merchants and less income for local workers.

Shawn Overstreet manages the Mountain Shop in Skagway, he says the tax holiday is good for everybody.

“I think it certainly makes a difference. Especially these years where it’s been kind of financially hard on a lot of people. I think any little savings that you can accrue goes a bit further these days,” said Overstreet.

He also says one of the only problems with the tax holiday this year is that he’s not sure most people know it’s happening.

“I just found out through an email that hit the shop last week. So I think, I’m not sure what’s being done to make it known to the public.”

Kristen Wagner manages Duff’s Backcountry Outfitters, and she says the holiday helps support people who want to shop locally.

“I do like to think that people are choosing to shop locally versus online or something where they are getting charged tax now where it used to be no tax. So I think it makes us more competitive. We do notice that people come in during the tax holidays,” said Wagner.

She also says people tend to hold off on winter shopping until the tax holiday takes effect.

“People get stocked up on their essentials, you know, they’ll come in and buy a bunch of underwear and socks and Levi’s,” said Wagner.

She said her parents are waiting until October 1 to buy a new Toyo stove for one of their business’s employee housing units.

Jason O’Daniel works at the Skagway Hardware Store and he says he expects more big-ticket orders after October 1.

“100% some people will wait for doing some of those special orders until we are you know in a sales tax holiday. I know for me I handle furniture and appliances and that’s usually when I get the most special orders,” said O’Daniel.

He recently ordered a new gift for his back porch, but he’s waiting until the tax holiday kicks in before he pays for it.

“I just ordered a smoker, yes a Traeger. So I will be purchasing that on the first,” said O’Daniel.

No word yet on when the first rack of ribs will be ready. The sales tax holiday starts this Friday and runs through April 1 of 2022.