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Mulling Online Sales Tax Collection, Unalaska Contributes $5,000 To AML Study

Rachel Cassandra/KCAW

Update: Before the Alaska Municipal League could complete its study, Amazon started collecting sales tax on online purchases made in Unalaska. For more on that development, click here.  

The Unalaska City Council wants more information before it decides whether to tax local purchases from online retailers like Amazon.

That's why councilors voted last week to contribute $5,000 to the Alaska Municipal League (AML).

The money will go towards an AML working group studying how Alaska communities might collect online sales tax. That possibility emerged last year, under the Supreme Court's South Dakota v. Wayfair, Inc. decision — and Mayor Frank Kelty said Unalaska should learn its options.

"I think it's worthwhile to get more information on this topic," said Kelty. "See how it might work — and if it will be a benefit."

Unalaska has had a three percent sales tax since 1988. While councilors unanimously agreed to support the AML study, they acknowledged that collecting that existing tax on online purchases — which were previously exempt — might feel like a new tax to Unalaskans.

"Taxation is always, always tough, especially with the cost of living in this community," said Vice Mayor Dennis Robinson. "But on the flip side, this community is required to put in infrastructure to handle all the stuff that comes in [through online sales]. So it is a concern that we really need to take up."

Officials haven't released an estimate on how much the City of Unalaska stands to gain if sales tax is collected from residents' online purchases. But financial reports show the city's overall sales tax revenue has declined $1.2 million over the last four years.

Finance Director Clay Darnell said he's still analyzing why that revenue is down.

Unalaska's contribution to AML — from the council's contingency fund — is $2,500 less than the organization requested. It also joins donations from a handful of other Alaska municipalities supporting the study, including Bethel, Soldotna, and Juneau.

Laura Kraegel reported for KUCB from 2016 until 2020. She was KUCB's news director starting in 2019. We are proud to have her back in the spring of 2023 filling in as an interim reporter for KUCB.
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