Alaska’s ongoing budget struggles don’t appear to have any quick or easy solutions. Those problems continue to trickle down to cities and boroughs, which are picking up a bigger share of operating costs every year. But the Alaska Municipal League is trying to give local governments a new source of revenue.
A Supreme Court decision issued last June has paved the way for local sales taxes to be collected from remote sellers. Nils Andreassen (an-DRAY-us-sen) is the executive director for the municipal league. He says the court decision laid the framework for collecting taxes from retailers like Amazon, but there is a lot of regulatory work left to do.
“Since the state doesn’t have a statewide sales tax, and to comply with the Interstate Commerce Clause, basically what you’re looking at is municipalities through AML forming something like an independent or semi-independent body that contracts for online sales tax collection, remittance and auditing.”
Beyond a bump in revenue, Andreassen says applying a tax to online sales could also help local businesses that might be at a disadvantage because they do have to charge a sales tax.
“Right now, local businesses are competing with online retailers that don’t have to collect a sales tax. We’ve certainly seen a shift in buying behavior from consumers. And so this provides a level playing field for businesses in Alaska.”
He says they hope to have enough information put together by late spring to have some proposals for municipalities to consider. The Kenai Peninsula Borough may share in some of the cost of that. Mayor Charlie Pierce has asked for $10,000 to send to support establishing a centralized sales tax administrator for remote sales. It’s estimated that the borough could gain an extra $1.5 million annually from such a tax. The assembly will vote on whether to support the effort at its January 22nd meeting.