My Turn: State income tax offers tax fairness

Posted: Monday, March 04, 2002

I've followed with amused interest the attempts of the Legislature to put forward some new old ideas to cure our fiscal woes. It's good to see some talk about the situation. I hope unlike the last four years that this year we'll see some action.

The proposed state sales tax would add more problems to communities which already have a sales tax in place. Many communities have a sales tax which helps to pay for services and also to pay for capital projects. In the case of Skagway, which has a 4 percent sales tax, if a state tax of 8 percent was enacted, we would be at 12 percent, which would be over the level of allowable sales taxes permitted by law. It would lower the ceiling that some communities need to tax at to maintain the status quo. Skagway received no state dollars for capital projects during the last four years and yet because of our 4 percent sales tax coupled with a strong tour industry we were able to complete several capital projects.

Ugly or not the rural-urban divide does exist and sticking our heads in the sand will not make it go away. The population centers are taken care of first and the rural areas get what's left, which in the past four years hasn't been enough. An example is what Senate Bill 36 did to smaller communities. This bill was going to fix the unfairness in the school-funding formula and in spite of protests from myself and many others, it was rammed right down our throats. We had legislators saying some communities like Skagway don't pay their share of education costs. I would like to see Anchorage or Fairbanks pay 45 percent of their school budget and get told they don't pay their share. The fact remains as was stated in 1998 that Senate Bill 36 did not solve school funding.

The permanent fund continues to be the target of some legislators who obviously don't care what the voters said by an overwhelming margin: Leave it alone. When the people speak as in the vote on using the permanent fund and are ignored by legislators who continue to push their use the fund agenda, I believe it's time for some retirement parties. Legislators who don't accept what the voters decide and feel their intellect outweighs the voters' rights have lost their focus on who they swore to serve not master.

The proposed head tax on cruise ship passengers is one of the most unjust and un-Alaskan things ever proposed. No. 1, we insisted the cruise industry meet high standards of pollution controls, an expense accepted as the right thing to do. They did it. I've been below on many ships to see for myself. Yet we failed to hold our own marine system to the same standard, which I find embarrassing and hypocritical. No. 2, the marine highway is a tourist highway during the summer. A tourist headtax is a cheap shot at a specific industry to cure our problems at no cost to us. A nice way to bank votes in the next election perhaps. No. 3, unlike fishing, mining and logging, the federal government hasn't yet closed down our tour industry, but we sure seem to do our best to single it out and discourage it instead of embracing it as an industry that has enabled many communities to thrive and grow instead of turning into memories of the past.

The income tax is tax that is paid by anyone working in Alaska resident or not. It singles no one out as the source of our climb back to fiscal security. One legislator rejected the income tax as not being enough two years ago. Had it been passed two years ago we sure would have been in better shape today than we are. Targeting the permanent fund singles out Alaskans. Targeting the cruise headtax singles out some of the visitors. Neither touches the 17 percent of the workforce in Alaska that comes for the summer season and yet each one by itself is unfair. Our lack of money is not the cruise industry's fault and it shouldn't be singled out as the cash cow to fix it.

An income tax is the first most fair step to take. It may not be enough but, if it isn't at least we tried it instead of talking about it. It would be much more fair if we had to seek other sources that could include headtaxes, the permanent fund, or state sales tax if the income tax didn't generate enough income to meet the need.

John Mielke served as mayor of Skagway from October 1997 through last September.

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