Anchorage’s bed-and-breakfast tax scheme shows how far local government will go to claim your property

By SUZANNE DOWNING

Anchorage Assembly leftists are at it again.

On Tuesday night (Dec. 2), the Assembly will take up not only a proposed sales tax, but also another tax: A new 5% levy on small bed-and-breakfast operators, a group that is already paying the city’s 12% bed tax.

If this passes, Anchorage’s mom-and-pop B&B guests will soon be looking at a staggering 17% tax rate, the kind of rate you would expect in the big hotel corridors of Los Angeles or Chicago, not a city struggling to keep visitors coming year-round. For example, New York City’s combined bed taxes and fees are 18% – Anchorage B&B’s would be close.

This proposal is bigger than lodging taxes. It gets to the core question of what it means to own anything in Anchorage anymore. For generations, Alaskans have taken pride in property ownership: sweat equity, a small patch of land, maybe a tiny rental or a mother-in-law apartment to help make ends meet.

But under today’s Anchorage Marxist municipal mindset, that effort isn’t a virtue. It’s an opportunity for the city to take another cut.

Alaskans already live under the weight of a property tax system that undermines the very idea of ownership. If the government can seize your home for nonpayment, if you must pay the municipality every year just to keep living on land you already paid for, how much of that home is really yours?

Property taxes themselves function like perpetual rent to the city, and the people hardest hit are low- and middle-income families, seniors living on fixed incomes, and long-time residents who suddenly find that the neighborhood they built their lives in is becoming unaffordable.

Now Anchorage wants to go one step further. If you rent out a room or a small cabin on your own property in order to help you pay those taxes, the city wants another slice of your income, and not just the existing bed tax but an entirely new 5% tax layered on top.

The question becomes unavoidable: Is it your property, or are you simply managing it for the municipality’s benefit?

Government almost never takes one big bite. It prefers increments. Anchorage already has a fuel tax, car rental tax, alcohol tax, marijuana tax, and bed tax. Now we have a proposed 3% sales tax that is in clear conflict with the city charter’s 60% voter-approval requirement, and the Assembly wants to tack on this B&B tax for good measure. These small bites add up, and they always grow, and these days all the taxes and bonds seem to be “outside” the tax cap. Once a new revenue stream exists, it never disappears, but rather it becomes the base for the next increase.

For families who operate B&Bs, this isn’t a policy debate. It’s their livelihood. A 5% increase might sound bureaucratically modest, but in practice it punishes the smallest players the hardest. A $150 room rented for four nights would carry roughly $30 in additional taxes, enough money that a visitor may skip a lunch out, buy fewer souvenirs, find a cheap hotel, or trim their activities. That loss ripples through the local economy, hitting restaurants, guides, drivers, and shops. Tourism dollars don’t stay in one pocket; they circulate. Reduce the flow, and everyone feels it.

And then there is Girdwood, a community that fuels our winter tourism industry yet receives few municipal services in return. A huge number of homes there are vacation rentals. Visitors there will also pay these taxes. How long until more Girdwood residents decide, as Eagle River has begun to do, that they’d like out of the Anchorage tax machine entirely?

The city claims that raising taxes on short-term rentals will magically encourage long-term housing. It won’t. A homeowner who rents out a mother-in-law apartment to pay the mortgage isn’t going to abandon that revenue because the Assembly layered on another tax. This tax is about money — more money for an administration that treats downtown murals and warming the sand at the port as a higher priority than protecting small businesses, healing the destitute who drape themselves over every public surface, and preserving affordability.

At some point, residents have to ask what remains untaxed. The city taxes your fuel, your grocery bags, your alcohol, your marijuana, your property, and soon, if the Assembly gets its way, your everyday purchases through a new sales tax. Now it wants to tax the very act of you putting your own property to productive use. What does Anchorage believe it doesn’t have a right to tax?

A 17% lodging tax rate on small operators is punitive, unnecessary, and counterproductive. It will push visitors away, strain families who rely on supplemental income to pay their already high property taxes, and further entrench Anchorage as a place where innovation and industriousness are punished rather than rewarded.

This proposal deserves a hard no. The Assembly should reject it outright, and Anchorage residents should take note: While the agenda on Tuesday is crowded with a proposed 3% sales tax and numerous other controversial items, this one is a bellwether. It shows, in plain terms, how far local government is willing to go to claim a piece of what you worked to build.

Suzanne Downing is editor of The Alaska Story – where the conversation happens.

Anchorage Assembly to vote on 5% short-term rental tax proposal and new rules