Bed tax fails, sales tax cap goes to ballot

Kenai Peninsula voters will get to decide again if they want to raise the cap on taxable sales in the borough this fall.

The Kenai Peninsula Borough Assembly at its Tuesday meeting approved a ballot proposition asking voters if the borough should raise the cap on taxable sales from $500 to $1,000. Currently, sales tax only applies on amounts up to $500. The one exception is for residential rents, which will remain only taxable up to $500.

If approved, the proposition would generate between $2.9 million and $3.1 million annually, which by borough code would have to be used to support education.

Voters rejected a similar measure in the October 2016 regular election by a wide margin, along with another tax measure seeking to phase out the borough’s optional portion of the senior property tax exemption. This time around, the assembly opted to ask voters about the sales tax cap increase again instead of asking them to institute a borough-wide bed tax, which met strong opposition from the lodging and tourism industry, particularly in Homer.

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