By Frank Dahl
April 24, 2020
For many of us, the sudden realities of the COVID-19 pandemic are like a slap in the face. Visceral emotions and anxiety, tangible losses, a plummeting economy of closed businesses, and $10 barrels of oil. The carnage and catastrophic damage from illness and financial decimation will be long-lasting.
As I try to equate hardships from a positive vantage point, defaulting to a “could be worse” perspective, in the case of Alaska’s hospitality market – particularly in Anchorage, optimism is tough to come by.
I’ve owned enough bars, restaurants, and retail stores over five decades to understand the basics of economy and cycles. Weathering the storm of consumer downturns or cost overruns is part of a hospitality business owner’s existence. We’re used to it. Even new taxes and fees, while not favored, can come to fruition if short-sighted policymakers and anti-business advocates gain an edge in public sentiment. Our industry is one of perseverance, consistent service delivery, and accountability.
But the most recent Municipality of Anchorage election, and the passage of a new alcohol tax, makes me take pause. Perhaps the hospitality industry is entering a new dawn? One where the public and government minimize its importance and place little value on the tens of thousands of employees and their families in the industry.
I’m perplexed at how the voters in Anchorage could even remotely endorse taxing the hospitality industry at the same time the industry has been shuttered and forced to close. Bankruptcies, defaults, droves of staff laid off, unemployment skyrocketing, relied-upon patronage rethinking social eating and drinking… the prolific effects of COVID-19 may very-well have hobbled the hospitality industry for years to come.
Examples of the canceling of the cruise ship season, coupled with massive reductions in flights and hotel reservations, and restaurants and bars being closed are the most in-your-face results of our pandemic. Add to the equation temporary closing of movie theaters, bingo, and charitable gaming venues, bowling alleys, entertainment centers (e.g. fun centers; trampoline parks; laser tags), and myriad recreational establishments, and suddenly we’re in a literal calamity of epic proportions.
So back to the tax that only a slim majority of Anchorage voters barely approved.
For those that voted “yes,” why on Earth would you be duped into thinking a new tax on alcohol sales will reduce crime, lessen homelessness, or resolve mental illness rife throughout the Municipality?
I oppose alcohol tax, from an industry perspective, because of five primary reasons:
(1) A new tax sends a derogatory message to patrons and industry employees that we’ll all be penalized even in a downturned economy – and it suggests alcohol is bad (hence the label “sin tax”);
(2) A new tax nudges patrons who were already considering eating and drinking at home – to do so because now they’re unsure how much more expensive their food and beverages will be after a tax, which causes a domino effect of lost revenue (e.g. the fuel used to drive to an establishment; no baby sitter used; no parking fees paid downtown; and of course, no patronage at establishments so the wait staff earns less and food services are lessened and distributors deliver less…rippling into a depreciated economy);
(3) Earmarking and promises of curing societal woes through a tax hike on food and drinks (or a hotel room or rental car or airline ticket or chewing tobacco or cannabis or vehicle fuel…) are illusory and almost never results in a community benefit or measurable resolution to civic problems;
(4) Government at many levels is too big or inefficient, and lacks accountability, so adding more money to political coffers is throwing caution to the wind; and
(5) In consideration of the pandemic before us, adversely affecting industries across the spectrum globally, a new tax NOW is offensive and insulting to an industry that’s foundational to Alaskan commerce;
Rather than shame the pro-tax, anti-hospitality industry electorate, and policymakers, I’ll try to be thoughtful and positive.
The food, beverage, lodging, and transportation facets of the Alaskan hospitality industry are integral to the state’s economy. All totaled, our industry is likely the second-largest sector after natural resource development.
The havoc thrust upon employees by COVID-19 will cause irreparable harm in some cases – and severe business injury to nearly all others. This is pure devastation.
It’s time for the members of the state’s executive and legislative branches at all levels, from municipal to borough, state to federal, to rise to the occasion and actively support the hospitality industry.
Don’t even consider a tax (and preferably repeal the Anchorage alcohol tax just passed).
To all of the government leaders, please help our industry now. Allow doors to be open and services to be rendered!
To past, current and prospective customers, please buy from, shop at, and patronize hospitality services as much as you can afford to start our economic engine.
Solidarity in support of the hospitality industry is critical now, more than ever.
The havoc thrust upon employees by COVID-19 will cause irreparable harm in some cases – and severe business injury to nearly all others. This is pure devastation.
It’s time for the members of the state’s executive and legislative branches at all levels, from municipal to borough, state to federal, to rise to the occasion and actively support the hospitality industry. Don’t even consider a tax (and preferably repeal the Anchorage alcohol tax just passed).
And while we’re at it, let’s thank people in the industry and show our appreciation for what they’ve faced, and risk, as they serve all of us every day and stand at the front lines of business.
We’ll get through this pandemic and hopefully be the better for it, God willing without new fees and taxes, and motivated because of how vital our beloved hospitality and tourism industries are to the Last Frontier.
Frank Dahl is a former board member of Alaska CHARR, co-founder and former President of Anchorage CHARR, and longtime bar and restaurant owner. He’s a Paul Harris Fellow in Rotary and Alaska Legislative Citation recipient for community and economic service to the state of Alaska.
Tim Staton / April 24, 2020
I am not a fan of taxation, But the taxes that are implemented are not a tax on the sellers/vendors of alcohol or the renters of rooms and even Tobacco or Pot. The tax is added to the the alcohol, tobacco, Pot, and/or the rooms above and beyond the retail cost.
Your profits are not being reduced by taxation because the consumer of the taxed products or the person staying in a hotel is paying the taxes not you.
There is no impact directly to your profit margins since the tax is a separate charge on the receipt other than your responsibility to track that taxes and pay them out to the Government. The only cost to a vendor is no different at 1% than it would be if it were 10%. Vendors of taxed businesses still bare the same burden to report and pay out the collection of taxes.
If the taxes were to be eliminated I would be that the total cost of a room would stay the same as the total with a tax as well as the drink or smoke.
It is well known that once a consumer is willing to pay an amount as the market bares when the tax is reduced the price is generally maintained as what the market will bare. Your argument that Alcohol or bed taxes costs you money as a reduction of profit directly is invalid.
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