Murkowski gets behind sales tax measure

Posted: Friday, May 09, 2003

JUNEAU (AP) Gov. Frank Murkowski has given his support to a plan for a statewide sales tax that would automatically double during the summer tourist season.

The governor says he would support such a plan as part of a package that also raises the state's motor fuel tax by 12 cents a gallon.

The sales tax proposal is now under consideration in the House Ways and Means Committee.

Murkowski is trying to help balance the state budget with spending cuts and several tax and fee increases. The tax measures and some of the cuts face uncertain fates in the closing days of the legislative session.

But he said Thursday that he will support the year-round sales tax, with the increase when tourists are spending money in the state.

We feel that this takes some of the burden off of Alaskans and shares some of it with our visitors,'' Murkowski said.

The House Ways and Means Committee considered the measure on Thursday crafted by co-chairmen Jim Whitaker and Mike Hawker, both Republicans.

The bill would impose a state sales and use tax of 2 percent that would automatically increase to 4 percent from April 1 to Sept. 30. It would raise about $170 million in the first year, since the tax wouldn't be collected for a full 12 months. In later years, it would raise about $400 million.

The tax on cars, watercraft, aircraft and mobile homes would apply only to the first $5,000 of the value. The bill would also exempt such items as dividends and interest, wages, raw manufacturing goods and items bought for resale.

Unlike some local sales taxes currently being collected, it would not exempt senior citizens. Nor would it exempt utilities, garbage collection and numerous goods and services already carved out by some local governments.

Local governments that collect a sales tax would continue to receive the same revenues, but consumers would pay no more than 8 percent.

Juneau's existing 5 percent sales tax, for example, would increase to 7 percent in the off-season, but would stop at 8 percent in the summer. The borough would continue to receive revenues from its 5 percent levy. But the state would collect three cents on the dollar in Juneau, rather than the four cents raised in other communities.

Local taxes would be limited to 6 percent after Jan. 1, 2008, and that limit would be reduced in later years under provisions of the bill.

In 2010, municipalities would be limited to a 5 percent sales tax from April 1 to Sept. 30. In 2012 and thereafter, the local tax would be capped at 4 percent.

Ultimately under the bill, local governments would not be allowed to charge more than 6 percent sales tax in the winter and 4 percent in the summer.

The Alaska Municipal League which represents boroughs and local governments opposes to the measure, said spokesman Kevin Ritchie.

The complexity of the bill make it difficult to detect the full impact on local governments if the measure takes effect, according to Ritchie. But in any case, the state should not impose a sales tax, he said.

The sales tax has historically been a municipal tax. Even when things were very tough for Alaska, the Legislature had always reserved sales taxes for municipal governments,'' Ritchie said.

Things are tough for Alaska now and Murkowski had asked lawmakers to chose between a seasonal sales tax and a $100 head tax on workers. His proposal was part of a host of new and increased taxes and fees he has sought.

Through these and a number of one-time revenue sources and budget cuts, the governor sought to limit the state's draw from its budget reserve account to less than $400 million.

Drawing more than that could harm the state's bond rating and increase the cost of some future state and local government projects, the state's financial advisers warn.

Republican lawmakers are looking at several revenue proposals in the closing days of the session to help the GOP governor balance next year's budget.

While the House has been more willing to broach the subject of tax increases, the Senate has given little indication that it is willing to go along.

Senate President Gene Therriault, R-North Pole, said this week that it's not clear whether his caucus would approve a sales tax measure.

Whitaker, a Republican from Fairbanks, said the tax bill rolled out Thursday would go a long way in closing the gap.

The measure does also include the 12 cent increase in the state's gasoline tax to raise about $38 million. That mirrors a bill backed by Murkowski already before the Legislature.

We have to get to a particular revenue point, hence we combined them both,'' Whitaker said. Have one big fight rather than two big fights.''

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