Taxation was once again a topic of discussion at the Kodiak City Council’s work session last night. One of the things talked about was a possible tax on alcohol. City manager Mike Tvenge said in the past it was believed the city couldn’t tax alcohol, but that’s not completely true.
The city can’t place an excise tax on it, but it can have an alcohol sales tax. Tvenge read excerpts from a document written by the city’s lawyer, and then clarified what the attorney wrote for the council. He says there are stipulations on how high the tax rate can be, right now the sales tax on general goods is seven percent.
“If a municipality has a general sales tax rate and wants to charge a higher rate for alcohol it must also tax another good or service at the rate it would tax alcohol.”
Tvenge says since the city has a 12 percent bed tax, which is a fee applied to renting a room from local motels or hotels, it’s possible to place a 12 percent sales tax on alcohol. Tvenge also pointed out that it’s estimated if alcohol was taxed at a lower rate, like 5 percent, it would earn almost a half a million dollars for the city.
In connection with the discussion, Tvenge wanted to clarify how the city can and cannot raise sale taxes.
“So we’ve heard a couple people say we’ve implemented taxes without the public’s vote. We are not required to as a home rule municipality, nor does our charter ask or state we go before the public.”
The potential alcohol tax will be up for discussion along with many other revenue-generating measures at a special public forum the city is holding on October 16th at 6 p.m. The council wants to get resident’s feedback on how the city should raise funds.