Senate committee approves 15 percent tax on pull tabs

Posted: Wednesday, May 07, 2003

JUNEAU (AP) A Senate committee approved a bill to impose a higher tax on pull-tab gambling Tuesday.

But the measure only generates about half of what Gov. Frank Murkowski had been seeking.

The Senate Labor and Commerce Committee approved a bill to increase the tax on pull-tab proceeds to 15 percent of ideal net receipts. The measure would raise about $9 million.

Sen. Con Bunde, chairman of the Senate Labor and Commerce Committee, said Murkowski's proposal was asking too much.

That would have put too many people out of business,'' Bunde said.

The committee also agreed to continue to study the state's charitable gaming industry after the Legislature adjourns.

My sense is that this area is ripe for major reform,'' said Sen. Hollis French, D-Anchorage, who will serve on a two-person subcommittee studying the issue with Sen. Ralph Seekins, R-Fairbanks.

I don't think that we were giving it the amount of time to do that,'' French said.

The state's pull-tab industry generated about $274 million in revenues in 2001, netting about $23 million for charities and other organizations. About $214 million was paid out in prizes and the remainder is spent on taxes and expenses.

Alaska receives about $2 million from taxes on pull-tabs and about 12 local governments draw sales tax revenues from parlors.

Murkowski had proposed an 8 percent tax on gross receipts as part of an overall $113 million package of revenue and tax measures to help close the state's budget shortfall.

The pull-tab tax increase would have generated about $22 million for the state.

Murkowski had been critical of how gambling revenues are shared with charities in 2001 they received less than 10 percent of the take and wanted to ensure they did not lose money. The governor had proposed placing a 68 percent cap on payouts to preserve the share going to charities.

Charitable gaming interests also sought a provision to block local governments from imposing a sales tax on pull-tab proceeds.

Neither of these proposals made it into the bill passed on Tuesday. Seekins said those issues will be studied over the summer.

At least one pull-tab operator said the Senate bill could drive it out of business. Bob Loescher, president of Juneau Tlingit-Haida Community Council, said the tax would virtually wipe out the amount of money we can donate to charity.''

Last year the organization generated $42,000 from pull-tab and bingo events and gave $16,000 to charities. Loescher said his organization plans to lobby against the bill in the remaining days of the Legislature.

Senate Bill 102 now goes to the Senate Finance Committee for consideration.

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