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Bed tax illogical

Posted: August 1, 2014 - 7:11am

Hotel guests staying in the Kenai Borough are already paying a disproportionately high amount of tax on lodging. The sales tax a hotel guest pays is currently 6 percent of the room charge for each night, unless a guest stays longer than a month. If a hotel guest stays longer than 30 days, a maximum tax rate applies that is similar to the sales tax paid on a monthly apartment rental, which is usually approximately $30 of sales tax for each month an occupant rents an apartment.

A typical hotel guest stays for less than a week on average, at any one time. However on the Kenai Peninsula there are many hotel guests that are repeat visitors, and their total nights stayed over time easily adds up. For example, based on the current tax code, if a guest were to stay in a hotel for 29 days, based on an average room price of approximately $100 per night, the sales tax would be $174. This is almost 6 times the amount of sales tax being paid on the apartment rental for almost the same length of time. This may not be a perfect comparison but it is easy to see that our hotel guests are already paying much more in sales tax on their lodging, than all others are currently paying.

Hotel guests spend more money in our community than many other types of visitors. They rent cars at our local airport where they pay a very high airport rental tax, they buy gas at our local gas stations, they eat in our restaurants, they tip our waiters, waitresses and bar tenders. They shop in our local stores, buy lattes at our coffee stands, always want newspapers, go on fishing trips and purchase gifts made by our local craftsmen, etc., etc. Generally speaking, hotel guests bring only a suitcase to town and buy almost every other thing they might need from our local businesses. Overall, as a consumer group, our hotel guests are already paying a disproportionately large share of local sales tax.

Hotels are relatively few compared to other types of businesses that serve our visitors. It does not seem logical to impose a separate tax on a relatively small group of hotels that have made a substantial investment in our community, pay a very high amount of property taxes every year and employ many of our residents. Further, most of the hotels are owned and operated by local families and imposing a hotel tax will only cause these businesses to be less competitive in the overall Alaska market to travelers.

The only tax that does more good than harm is a tax — that taxes everyone and every business evenly. And most importantly — the voters must decide this issue, whatever the outcome. As Mrs. Massey and Mr. Bird taught us many years ago at Kenai High, “There shall be no taxation without representation.”

Respectfully,

Julie Latta

Kenai

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