House committee shelves seasonal sales tax

Posted: Sunday, May 11, 2003

JUNEAU (AP) The House Ways and Means Committee is likely to shelve a plan to impose a statewide seasonal sales tax in favor of a more simple tax plan.

Rep. Jim Whitaker, a Republicans from Fairbanks and co-chairman of the committee, said Saturday there was not enough support to pursue a plan to impose a 2 percent year-round sales tax that doubles in the summer.

Such a plan had won the backing of Gov. Frank Murkowski, who needs millions to help balance the state budget and lessen the draw from Alaska's dwindling reserves.

It would have raised about $400 million but included a complex mechanism for local governments that already have sales taxes in place to cope with the change.

Rep. Bruce Weyhrauch, R-Juneau, instead proposed the committee take up a simple 3 percent statewide sales tax that would be in place year-round. State revenue officials would be left to devise details for implementing the tax.

Local governments also would not be prohibited from imposing their own sales tax.

Weyhrauch said with so little time left in the session the Legislature is set to adjourn in 11 days a simple plan should be pursued. And the Legislature will be inundated with special interest groups seeking exemptions, he said.

I just think we have such a huge task in front of us in implementing a statewide sales tax policy, we don't have the tools, the time or the equipment to do it, nor do we have the wherewithal to say no to every lobbyist that is going to come in here and want their special deal worked out,'' Weyhrauch said.

The committee did not adopt Weyhrauch's amendment, but Whitaker said he hopes to have legislation crafted by Monday for the committee to vote on.

Whitaker and co-chair Rep. Mike Hawker, R-Anchorage, had offered a bill earlier to impose a 2 percent sales tax from Oct. 1 to March 31. House Bill 293 would have had the tax increase to 4 percent from April 1 to Sept. 30.

It would raise about $170 million in the first year, since the tax would not be collected for a full 12 months. In later years, it would raise about $400 million.

It included several exemptions and would have restricted the ability of municipalities and boroughs to impose their own sales tax by placing an overall 8 percent cap on the tax.

It is not immediately clear what a 3 percent statewide sales tax would generate for the state, said Larry Persily, deputy commissioner for the state Department of Revenue.

The House Ways and Means Committee gave no clear indication whether it would support such a tax and several members expressed support for an income tax.

Rep. Peggy Wilson, R-Wrangell, said she will introduce an income tax bill next week. Wilson's community has a 7 percent sales tax in place. Other lawmakers said there is not enough time remaining in this year's session to pass a statewide sales tax.

I personally think we are pushing this too fast, too hard,'' said Rep. Cheryll Heinze, R-Anchorage.

Heinze said she plans to vote against the sales tax bill because her district favors an income tax and because the issue is too complex to resolve in the days remaining.

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