The Kenai Peninsula Borough Assembly is putting a ballot initiative before voters that could lead to people paying more in sales tax for large purchases in the borough.
At issue is the total price of purchases on which the borough collects sales tax.
The borough does not collect sales tax on purchases worth more than $500. For example, someone buying a $600 couch would pay the 3% borough sales tax on the first $500, and then no sales tax on the rest.
If passed, the ballot proposition would tie the maximum taxable amount to inflation every five years rounded to the nearest hundred dollars. The borough estimates the change would increase the cap by $100 for the first adjustment after the proposition passes.
The limit hasn’t changed since it was created in 1965. A memo says the limit would be well over five thousand dollars if it had been tied to inflation back in the 1960s. Analysis from the borough’s finance department says the change could generate up to half a million more dollars in sales tax revenue each year.
The cap doesn’t apply to monthly rent payments. But it does apply to daily and weekly stays at short-term rentals, like Airbnb.
Assembly members narrowly approved adding the proposal to this year’s ballot with a 5-4 vote. Those in favor say it could boost funding for the Kenai Peninsula Borough School District, which is the sole recipient of borough sales tax revenue. But those opposed say it would require a lot of administrative work for a relatively small payoff.
If passed, the new cap will go into effect in 2026.
Election day is Oct. 7. The voter registration deadline is Sept. 7. Voters can check their registration status on the Alaska Division of Elections website.
