Lawmakers propose creating a 3 percent state sales tax

Proposed tax would raise $330 million a year

Posted: Thursday, May 01, 2003

State House leaders say a year-round 3 percent state sales tax plan introduced Wednesday could raise up to $330 million a year to shrink Alaska's fiscal gap.

Gov. Frank Murkowski said he prefers a seasonal sales tax, but did not rule out supporting the proposal.

The measure was sponsored by the House Ways and Means Committee, which scheduled its first hearing for 7 a.m. today. The committee was formed recently to craft revenue-generating and other budget-balancing measures.

As written, House Bill 293 would raise about $330 million. It calls for no exemptions for food or other necessities, which could reduce the revenue stream. Lawmakers said exemptions could be added as the bill goes through the committee process.

Some House leaders prefer a sales tax over other proposals to close the gap between state spending and revenues.

House Finance Co-Chairman John Harris, a Valdez Republican, said Monday he would rather see a sales tax than a proposal to increase motor fuel taxes by 12 cents a gallon.

The gas tax increase was part of a $113 million package of tax and fee bills Murkowski introduced this year aimed at narrowing the budget gap.

Murkowski also proposed cuts, including trimming education spending and eliminating the Longevity Bonus Program for senior citizens. And he suggested lawmakers consider a seasonal sales tax or a $100 tax on employment.

Murkowski said at a news conference Wednesday he still prefers a seasonal sales tax because it would put more of the burden on tourists. But he did not rule out signing a year-round sales tax bill.

"It depends on what the mix is," he said.

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