Sandpoint considers beer, wine, liquor tax

SANDPOINT - A proposed city tax on beer, wine and liquor sales by the drink has some local business owners questioning whether they should shoulder an additional tax burden.

Council members examined a proposal to send a 2-percent alcohol tax to voters this November in addition to a renewal of the 5-percent occupancy tax on hotel, motel, bed and breakfast and vacation rental stays shorter than 30 days. After a negative response from some restaurant and bar owners, however, the council tabled the issue until its Sept. 3 meeting to consider additional options and get more information.

If approved by voters, the alcohol tax would require restaurants and bars to add a 2-percent surcharge to liquor, beer and wine sold on the license-holder's premises, while hotel operators would continue to do the same for short-term stays. The bed tax is expected to generate $250,000, while the alcohol by the drink tax would bring in $110,000. Both would go into effect Jan. 1, 2016, and run for eight years.

The taxes are proposed as a method to generate revenue from tourists. During their visits, tourists require increased police hours and emergency services and utilize public parks, infrastructure and utilities. Given those realities, the various resort city taxes take some financial burden off local taxpayers. The revenue is used to fund city infrastructure, street and sidewalk repair and construction, public safety services, park operation and more. Excess revenue collected from the tax goes into the Property Tax Relief Fund.

However, council members and restaurant owners both argued that unlike the so-called bed tax, which usually only affects non-residents, the alcohol tax would impact locals and visitors alike. Furthermore, some owners argued that the proposal unfairly burdened the bar and restaurant industries.

"Every business in Sandpoint relies on tourism, so it seems a bit unfair to single out one industry," restaurant owner Mel Dick said.

The tax would also impact standard drink pricing, which tends to center on round numbers, owners said. Finally, since tourists also buy alcohol from grocery stores and liquor stores, they wondered why those industries were exempted from the tax.

"If you're going to have a tax, then tax everything," Dick said.

Council members proposed several alternatives to the alcohol tax, including taxing all alcohol sales, implementing a 0.5-percent sales tax, or taxing drink sales only during a tourism-heavy time of the year. However, there was some confusion over what options would be allowed by state law. Council members chose to table the issue until more information was available and to allow more residents a chance to offer opinions.