In a move intended to help level the playing field for local merchants in competition with online retailers, the Sitka Assembly on Tuesday (12-10-19) approved a resolution to join the Alaska Remote Seller Sales Tax Commission.
That means the city will be a part of an intergovernmental agreement to create and implement a single collection point for online sales tax. Kevin Knox and Thor Christianson sponsored the resolution. Christianson said by not getting a seat at the table, the city would lose out on additional revenue that could be collected by this new entity, as well as revenue it’s already collecting.
“We’re getting approximately $300,000 from Amazon alone, but I understand that if we don’t do this, that goes away. As soon as there is this statewide agency, they don’t have to deal with us, they’re doing it purely voluntarily right now,” he said. “Essentially if we don’t do this, we’re saying to every vendor in town, ‘We choose Amazon over you.'”
In a memo, chief administrative officer Jay Sweeney wrote that the cost, should the assembly vote against participating in the commission, would be the loss of that $300,000, plus the loss of an additional $200,000 in anticipated revenue.
Kevin Knox stressed that Sitka needed to be a part of the creation process.
“We’re not at the table at this point so we’re not able to help craft any of this- Juneau, Ketchikan, Kenai, Kodiak and Wrangell were the primaries, and they’ve been crafting this, so they’ve been able to mold this in their vision to best fit their cities,” Knox said. “If we are ever going to get to the table we need to get there now so we can help put this together and start shaping, really.”
Assembly member Valorie Nelson said she was concerned about the cut the commission would take- that number hasn’t been decided yet.
“Nobody is telling us how much the fee is and they don’t know yet. So yeah we’re probably going to be better kind of sort of,” she said. “But I would hope that if we opt into this and we find out that we’re not realizing the revenue that we did before, that we can opt out.”
And assembly member Richard Wein questioned the logistics of taxing a seemingly endless stream of online vendors who currently don’t collect taxes for Alaska sales.
“Who is going to audit all the vendors?,” Wein asked, noting that there were more than 3500 vendors that do business in the state of Alaska. “And you have to understand that there is the Amazon Marketplace, and the marketplace is thousands upon thousands of independent vendors, and at this moment it’s only Amazon that pays the tax, not the marketplace. So all of a sudden we’re going to be dealing with this. Who is going to enforce that?”
He also wondered if the new agreement would undermine local tax code, like Sitka’s senior sales tax exemption. Brian Hanson, said as a legal document, he didn’t see any red flags.
“You are not contracting away your tax authority here at all,” Hanson said. “That’s a point we were very sensitive to when we were talking to other municipalities and the people who created this document.”
Ultimately the assembly passed the resolution 4-2 with assembly members Wein and Nelson opposed.
In other business, the Sitka assembly…
- Voted, on first reading, to put the salary for the vacant Community Affairs Director position toward hiring a Washington DC lobbyist — and to move $20,000 to the HR department to contract out work, as the department has been without a director since May.
- Approved $15,000 in legal fees associated with the sale of the utility dock to Hanson Maritime Company. That passed on a 4-2 vote with Richard Wein and Valorie Nelson opposed.
- Voted to reject a bid from Little Susitna for refrigeration repairs, and to execute a contract with Wyatt Refrigeration for $99,000 to replace a condenser at the Marine Service center, 5-1 with Nelson opposed.
- Unanimously approved liquor license renewals for Agave Restaurant and Ludwigs Bistro.
- Unanimously approved a marijuana retail store license for AKO Farms.
- Unanimously approved a list of acting administrators for 2020, including Melissa Haley, Michael Harmon, Dave Miller, and Sara Peterson.
- Unanimously reappointed Dave Gordon to a three year term on the Port and Harbors Commission, and Joseph D’Arienzo to a three year term on Tree and Landscape Committee.