Most of Gov. Murkowski's initiatives to increase industry and investment in Alaska are sorely needed. Unfortunately, the effect of his proposed sales tax will be detrimental to the goal of developing a strong resident economy.
Increased access to resources is essential, but the scope of most extractive mineral projects is very large, and requires outside capital. Local, Alaska-scale small business will generally service the larger national and multi-national owned developments. This is not a bad thing.
Unfortunately, a sales tax is about the worst possible burden that can be placed on the back of local small business. The effect is to cheapen mail order goods and send business outside. It is extremely difficult for a local retail outlet to compete on an even playing field. When the government deliberately imposes an additional penalty it becomes nearly impossible.
Also, a state sales tax interferes with revenue-raising schemes of many local governments, and places another burden on low-income residents already struggling to maintain. An income tax is a far better proposition.
The budget knife is to be applauded, but there is no doubt about the need to provide additional revenue to operate state government. There is also no doubt that residents of Alaska have had an easy ride since oil started flowing from Prudhoe Bay. To those who argue that an income tax unfairly penalizes the highest income earners, I would say to take some of your well-earned dollars and buy some perspective. Those who are benefiting most from this great land should not complain about contributing most to its health.
Developing an expanded tax base in Alaska is essential, and re-instituting the income tax is the most effective and equitable way of enhancing state revenue.