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Bethel City Council Adopts Online Sales Tax Code, Delays Effective Date Until September

Apr 15, 2020

Bethel City Council unanimously voted to adopt the Remote Sellers Sales Tax Code, but delayed the effective date until Sept. 1.
Credit City of Bethel

Starting in September, Bethel residents will pay sales tax on online purchases. On Tuesday, April 14, the Bethel City Council unanimously voted to adopt the Remote Seller Sales Tax Code, but delayed the effective date until Sept. 1.

By passing the ordinance, Bethel agreed to allow the Alaska Municipal League, or AML, to collect the city’s sales tax from online sellers on its behalf. During the meeting, AML Executive Director Nils Andreassen said that over 30 Alaskan municipalities, representing over 90 percent of the sales tax collected in Alaska, had agreed to go through AML to collect online sales tax. Andreassen estimated that the City of Bethel could make between $300,000 to $1.5 million in additional revenue. 

Former Bethel City Council members Richard Robb and Leif Albertson called in to protest the ordinance. They both said that an online sales tax would be a new tax, and that people should be allowed to vote on it. City Attorney Libby Bakalar disagreed that the remote seller's tax was a new tax. 

“It just adds a category of sales to be taxed, not a new tax,” Bakalar said.

The groundwork was laid for states to collect sales tax for online purchases by the 2018 U.S. Supreme Court decision in South Dakota vs. Wayfair, which stated that online retailers would have to collect and remit sales tax to states even if the retailer had no physical presence in the state where a purchase was made.

Council member Mark Springer wanted to postpone a decision until June, given the financial stress many households were already dealing with during the COVID-19 pandemic. Vice-Mayor Haley Hanson had another solution for the same problem. 

“I’m concerned about pushing this thing further and further down the line, as opposed to deciding on it with some delays in implementation,” Hanson said.

Council member Michelle DeWitt said that the council could revisit the Sept. 1 implementation date as the full economic impacts of COVID-19 become clear.

Council member Cecelia "Cece" Franko asked the AML Executive Director how exceptions for Elders would work. Andreassen said that it was a work in progress. He said that Amazon has the ability for Elders to upload their Elder tax exemption cards, but he acknowledged that many other websites don’t.

“We’re working on it. We’ve got something of a plan; we think it works,” Andreassen said. “All the commission members are really pushing to see something successful for their seniors and Elders as well.”

Council members said the online sales tax will allow the city to keep providing services to residents. Recently-added council member Hugh Dyment applauded his fellow members for making a difficult decision.

“It takes some backbone to do what you believe is good and just, even though people are going to be unhappy with it,” Dyment said.

The Bethel City Council also allocated $500,000 to fix the rotting floor in the Public Works Building. Former Acting City Manager Bill Howell said that he was pleased that the final estimate was well below the initial estimate of $1 million. However, he said that the project construction may see delays due to the coronavirus pandemic.  

Also during the council meeting, the city swore in new City Attorney Libby Bakalar and new City Manager Vincent "Vinny" Corazza. Corazza had the job of delivering some bad news at his first regular council meeting: Acting Police Chief Lieutenant Amy Davis has taken a different job, and the department will be without a chief or a lieutenant. Corazza said that he would appoint a new acting police chief to cover the leadership void soon.