Like others in Southeast, people in Petersburg may start seeing local sales tax charged on some online purchases. The borough last month heard the first report of such a sales tax charge from online retail giant Amazon and the local government is just starting to look into what that might mean.
The news about online sales tax came up at a work session on community ideas for the borough’s budget in late January.
“We had a report today that one of our local businesses ordered a couple of things from Amazon and got charged Petersburg sales tax,” borough manager Steve Giesbrecht told the assembly. “Now by the way I tried to order something myself just to play a game. They didn’t charge me any sales tax. I had my wife who just ordered something check the invoice, no sales tax on it. So I don’t know yet. There’s some discussion that it’s only Amazon stuff not anything that’s a third party seller through Amazon.”
Sales tax charges for online purchases have started showing up in other parts of Southeast. That’s following last year’s ruling by the U.S. Supreme Court that states can collect taxes on out-of-state sales regardless of whether a company has a physical presence in that locale. And while some companies may be starting to charge that sales tax, there’s no money making it yet to the borough’s coffers.
“Amazon has not talked to us,” Giesbrecht said. “We have not talked to them. We don’t really know much. And I tried today to try to find a number to call Amazon corporate and there doesn’t seem to be a way to do it.”
Giesbrecht said the borough’s finance department has reached out to some individuals seeking invoices showing online sales tax charges and is hoping to find out more information.
“I want to know when we get paid,’ he told the assembly. “No offense but we’ve had not only some of our local businesses, but we’ve had online people charge sales tax before and never pay us. And that one’s a big problem. They’re on the look out to make sure, OK fine, if you’re collecting this we should start getting checks for, you know reimbursement for it.”
He also explained that the borough isn’t currently set up to accept payments from online sales.
The Alaska Municipal League is meeting for a winter conference this month in Juneau and mayor Mark Jensen expected the topic to be on the agenda for that gathering. The organization sent out an email saying municipalities have to work toward a single, statewide administration of online sales tax collection. That would mean 105 cities and boroughs that charge sales tax will have to agree on exemptions, caps and other rules. AML says in places where physical sales are in code, like in Petersburg, municipalities will need to change their tax code to include online sales. Changes to sales tax in Petersburg require approval by a public vote. The email from AML also clarifies that online companies have made the decision to start collecting local sales tax without municipalities compelling it and before cities and boroughs are ready for that change. AML recommends municipalities contact their attorneys and make the changes needed to local code or ask online retailers to stop collecting the tax.
While it was a brief discussion at the work session, online sales tax wasn’t on the long list of ideas submitted by community members a year ago. The assembly was meeting to discuss which of those ideas to pursue or cross off that list. Some of those the borough is already investigating or taking steps toward, like a land swap with Petro Marine, possible changes to garbage and recycling service and encouraging tiny home construction. But assembly members were interested in other suggestions.
“I think there’s at least five in here I was looking at talking about raising fees for different things,” said assembly member Bob Lynn. “I really would like to see the manager go back and take a look at all our fee structures, see whether or not we need to increase fees in all areas at some time or whether or not we’re adequate right now. One of them for instance that I can think of is ambulance fees.”
Assembly member Jeigh Stanton Gregor said he opposed an ambulance fee increase the last time it came up for a vote but said he has since changed his opinion on that and wouldn’t vote against it. Local utilities could also be looking at continuing to increase rates for services like garbage, water, sewer and electricity.
Other community ideas for increasing revenue were boosting the cost for someone serving time in the Petersburg jail, an alcohol tax and capturing more income from summertime visitors.
Assembly members discussed developing more borough property for sale and increasing recycling, although solid waste and recycling is the topic of another work session this week. Since it was only a work session, the assembly only discussed budgeting ideas and didn’t vote on changes.