Kenai Peninsula Borough voters to decide on higher sales tax cap
Currently, the first $500 of a purchase in the Kenai Peninsula Borough is subject to sales tax, but a new ordinance would raise that threshold to $1,000. Voters will decide on the measure this fall.
Purchases within the Kenai Peninsula Borough, including retail sales, rents and services, are taxed 3%, up to $500. All the money collected is used for the borough schools, according to its finance department.
For example, if someone bought a television that costs $900, they would only be taxed for the first $500 of that purchase.
The $500 limit was set by the Kenai Peninsula Borough Assembly in 1965. According to the ordinance, the amount has never been adjusted for inflation.
There are hundreds of registered businesses that currently charge and collect the sales tax for the borough and the cities where they operate.
Cities like Homer, Kenai, Soldotna and Seward also charge a city sales tax. Those rates are combined with the borough's 3% sales tax, according to the borough's website.
Assemblyman Kenn Carpenter introduced the new ordinance to raise the maximum taxable amount to $1,000 Tuesday night, and the assembly passed it 7-2. It included an amendment that caps residential tax at $500.
The ordinance is in an effort to offset the decline in assistance from the state, as it grapples with its own budget.
Election day is Tuesday Oct. 1.
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