Online shoppers on the Kenai Peninsula can expect to pay a little extra for their purchases soon, as the Kenai Peninsula Borough and communities move toward a system of collecting sales taxes from online sales.
The city of Kenai passed a resolution at its meeting Wednesday that paves the way for collecting taxes from online sales.
The Alaska Remote Seller Sales Tax Commission was formed to create a centralized way to collect sales taxes when Alaskans shop online. Collected taxes will be distributed to the borough, which will keep its share and divvy out the amounts due to the cities of Kenai, Soldotna, Seward and Homer.
Kenai Mayor Brian Gabriel says that collecting online sales taxes is a way to support city services and facilities for people who live in Kenai, even if they’re shopping online, rather than in a brick-and-mortar store.
“This isn’t a new tax, in my opinion, it’s just a tax that sort of levels playing field,” Gabriel said. “It’s just sort of a way to put a litmus test, that if you ask How many people in this room bought something online in the last month? Most of the people would raise their hands. So that gives you a perspective. There’s nothing wrong with that but we still have infrastructure needs that we need to pay for to keep our city functioning.”
Giant online retailer Amazon is already voluntarily collecting and distributing sales taxes from Alaskans. Kenai attorney Scott bloom says that, soon, other retailers that do over $100,000 worth of sales, or 200 separate transactions, in Alaska will be collecting and remitting sales taxes, as well.
“In part what this does is it changes the nexus from a requirement that a company have a physical presence or a physical nexus in our community to having an economic presence or an economic nexus in our community,” Bloom said.
Councilwoman Glenese Pettey thinks the boost in sales tax revenue will help avoid hikes in other areas.
“It will be very beneficial for our city residents in the fact that it will keep our property taxes low and those resources will go into our general fund to help support the functions that the city takes care of,” Pettey said.
The measure passed unanimously. The Kenai Peninsula Borough Assembly is expected to pass its own resolution of support for collecting sales taxes from remote sellers at its meeting Tuesday.