Legislature(2015 - 2016)HOUSE FINANCE 519
04/06/2015 01:30 PM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB135 | |
| HB155 | |
| HB15 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 135 | TELECONFERENCED | |
| *+ | HB 155 | TELECONFERENCED | |
| *+ | HB 15 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 155
"An Act relating to fees charged by the commercial
fisheries entry commission; repealing an exploration
incentive credit; amending the calculation of adjusted
gross income for purposes of the tax on gambling
activities aboard large passenger vessels; repealing
the amount that may be deducted from the motor fuel
tax to cover the expense of accounting and filing for
the monthly tax return; repealing a provision allowing
an investigation expense under the Alaska Small Loans
Act to be in place of a fee required under the Alaska
Business License Act; repealing the amount that may be
deducted from the tobacco excise tax to cover the
expense of accounting and filing for the monthly tax
return; repealing the discount on cigarette tax stamps
provided as compensation for affixing the stamps to
packages; repealing the amount that may be deducted
from a tire fee remittance to cover the expense of
accounting and filing for the quarterly fee return;
and providing for an effective date."
Co-Chair Thompson began his presentation from a prepared
statement:
In the 28th Legislature, legislation was passed that
defined Indirect Expenditure as foregone revenue. The
legislation set forth a requirement that certain
reports identify potential loss of foregone revenue.
Earlier this session this committee received an
overview of the Legislative Finance Indirect
Expenditure Report identified certain credits, fees,
discounts, and deductions that should be terminated.
House Bill 155 (HB 155) repealed those indirect
expenditures with an estimated increase of revenue by
approximately $450,000. The indirect expenditure
repeal in House Bill 155 were selected for repeal for
various reasons that range from the expenditure did
not meet legislative intent, had limited benefit or
usage, and were obsolete due to inactivity or
replacement by electronic filings.
BRODIE ANDERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
placed himself on the record and stated that HB 155 was the
next step in addressing foregone revenue to the state
identified in the 2015 Indirect Expenditure Report. HB 155
repealed the following indirect expenditures as follows:
• Small Loan Company Business License Exemption
Pg. 3 of the 2015 Indirect Expenditure Report
• Commercial Fisheries Entry Commission (CFEC)
Reduced Permit Fees,
Pg. 48 of the 2015 Indirect Expenditure Report
• CFEC Reduced Application Fees
Pg. 50 of the 2015 Indirect Expenditure Report
• CFEC Reduced Expediting Fees
Pg. 51 of the 2015 Indirect Expenditure Report
• CFEC Reduced Transfer Fees
Pg. 52 of the 2015 Indirect Expenditure Report
• Exploration Incentive Credit
Pg. 97 of the 2015 Indirect Expenditure Report
• Tobacco Product Tax Deduction for Timely Filing
Pg. 141 of the 2015 Indirect Expenditure Report
• Cigarette Tax Stamp Discount
Pg. 142 of the 2015 Indirect Expenditure Report
• Motor Fuel Tax Timely Filing
Pg. 143 of the 2015 Indirect Expenditure Report
• Large Passenger Vessel Gambling Tax Deduction
Pg. 163 of the 2015 Indirect Expenditure Report
• Tire Tax Discount for Timely Filing
Pg. 167 of the 2015 Indirect Expenditure Report
Mr. Anderson provided a sectional analysis of the bill and
read from a prepared statement:
Section 1: Adds a new section AS 16.43.100 to address
the removal of the low income permit fees and require
the (Commercial Fisheries Entry Commission) CFEC to
issue permits at the same cost to all permit holders.
Section 2: Amended AS 16.43.160(a) requiring the
commission to make each person pay the same fee with
the exception of the non-resident surcharge. The non-
resident exemption was included to ensure compliance
with the Carlson decision.
Section 3: Removed references to AS 38.05.180(i), the
Exploration Incentive Credit from AS 41.09.010(a).
Section 4: Removed references to AS 38.05.180(i) from
AS 41.09.010(b).
Section 5: Removed references to AS 38.05.180(i) from
AS 43.20.043(g).
Section 6: Amended 43.55.210 to disallow the deduction
for federal taxes for the purposes of calculating the
state tax on large passenger cruise ship gambling
activity.
Section 7: Amended AS 43.40.010(c) by removing
language that allowed motor fuel dealers to retain a
portion of the motor fuel tax due to cover expenses
for filing motor fuel tax return.
Section 8: Removed references to AS 43.50.540 from AS
43.50590(a) to conform to the repeal of AS
43.50.540(c) in Section 12.
1:49:19 PM
Section 9: Removed references of the Exploration
Incentive Credit from AS 43.55.011(m) to conform to
the repeal of AS 38.05.180(i) in Section 12.
Section 10: Removed references to the Exploration
Incentive Credit (AS 38.05.180(i)) from AS
43.55.023(a) to conform to the repeal of AS
38.05.180(i) in Section 12.
Section 11: Removed references to AS 38.05.180(i) from
AS 43.55.023(l) to conform to the repeal of AS
38.05.180(i) in Section 12.
Mr. Anderson continued with Section 12 that contained the
Statute Repealers:
· AS 06.20.030(c) was the subsection that allowed
the license fee Small Loan Company License to
replace the Alaska Business License.
· AS 16.43.160(d) was the subsection that
established the reduced fee for low income permit
holders within the CFEC.
· AS 38.05.180(i) was the subsection that
established the Exploration Incentive Credit.
· AS 41.09.030 is the section that referenced the
relationship of the Exploration Incentive Credit
to Title 41 Chapter 9 (which is Title 41 - Public
Resources / Chapter 09 - Oil and Gas Exploration
Incentive Credits).
· AS 43.50.330(b) was the subsection establishing
the filing deduction for the Excise Tax on
Tobacco Products.
· AS 43.50.540(c) was the subsection that
established the discount for the Cigarette Tax
Stamps.
· AS 43.50.540(h) established a definition of the
stamps that were eligible for the discount.
· AS 43.98.025(e) was the subsection that
established the deduction for filing in the Tire
Fees.
Mr. Anderson cited the three Code repealers in Section 13:
· 20 AAC 05.250(b) was the code that established
the reduced fee for low income permit holders
within the CFEC.
· 20 AAC 05.425(e)(1)(2) was the code that
established the reduced fee for expediting fees
for low income permit holders within the CFEC.
· 20 AAC 05.1910(h) was the code that established
the reduced fee for transfer fees for low income
permit holders within the CFEC.
Mr. Anderson spoke to the final three sections:
Section 14: Provided transitional language related to
the repeal of the Exploration Incentive Credit and
CFEC low income transfers.
Section 15: Contained the effective date of January 1,
2016 for the gambling tax activities based off of the
federal tax calendar year and the fact that the
gambling tax was paid annually.
Section 16: Contained the effective date of July 1,
2015 for all other sections in order to comply with
the State of Alaska fiscal calendar and all other
related fees, discounts, deductions that were
calculated monthly.
Representative Wilson shared that she supported the
legislation.
Representative Kawasaki wanted to know whether HB 155
included all of the indirect expenditures recommended for
termination in the Indirect Expenditure Report (copy on
file).
Mr. Anderson responded that the report identified several
indirect expenditures for termination having to do with
corporate income tax. Other indirect expenditure regarding
corporate income tax were recommended for policy review and
reconsideration. He relayed that the sponsor thought the
corporate income tax indirect expenditures needed to be
further scrutinized and examined comprehensively as a whole
and were not included in the legislation.
1:54:42 PM
Representative Kawasaki asked whether the finance analysis
in the report was provided by LFD. Mr. Anderson confirmed
that the recommendations came from LFD and added that the
numbers were provided by the Department of Revenue (DOR).
Representative Kawasaki asked whether DOR had any comments
regarding the recommendations from LFD.
JERRY BURNETT, DEPUTY COMMISSIONER, TREASURY DIVISION,
DEPARTMENT OF REVENUE, indicated that the department had
had discussions about the recommendations. He reported that
the department supported the legislation.
Representative Kawasaki understood terminating the direct
expenditures that had never been used or did not generate
revenue. He wondered whether DOR was comfortable with
terminating the credits that had a fiscal impact because
the credits were rarely used or had a negligible benefit.
Mr. Burnett responded affirmatively.
Co-Chair Thompson asked why the new DOR fiscal note
contained an appropriation for $50 thousand for updating
tax forms and contractor work to program the changes into
the Tax Revenue Management System (TRMS). He thought that
the appropriation was high.
Mr. Burnett responded that he would have to review the
estimate from the contractor. He added that each time
changes were made to the system the contractor was required
to update the system. He stated that the amount was the
departments "best estimate" of the contractor's charges.
Representative Gattis referred to legislation regarding the
Tire Tax [HB 88 Fees For Tires] and hoped that along with
passage of HB 155 the tax system would only collect the
taxpayers' information that was absolutely necessary.
Mr. Burnett stated that he had discussed the issue with the
deputy director of the tax division and reported that the
division was committed to reducing the amount of
information required.
1:59:50 PM
Co-Chair Neuman cited the fiscal note and wondered whether
the department had a contingency plan if the contractor
costs were less than $50 thousand.
Mr. Burnett replied that with passage of the legislation
the fiscal note would appropriate the entire $50 thousand
to the department. He qualified that if the costs were less
DOR would work with LFD and either lapse the funds or
include them in the supplemental budget. Co-Chair Neuman
commented that the fiscal note should be further examined.
Representative Guttenberg cited page 97 of the report
regarding the Oil and Gas Production Tax, State Royalty
credit and read the following:
Recommend termination. The credit appears obsolete and
ineffective given that it hasn't been used in over a
decade. The Alternative Credit for Exploration (AS
43.55.025 (a) (1-4)) appears to be a more attractive
incentive.
Representative Guttenberg indicated that there were two
incentives but only one was being used. He wanted to know
how it was determined which incentive was the best one to
remove.
Mr. Burnett was not prepared to answer the question. He
believed there had been an ongoing discussion about what
credits were necessary. He guessed that the credits
included in AS 43.55.025 were the most recent and the one
recommended for termination was outdated.
Representative Pruitt referenced Section 7, related to the
motor fuel tax. He asked whether the bill was simply
removing the incentive to file on time and no penalty was
applied. Mr. Anderson was not able to answer the question.
Mr. Burnett stated that all taxes had penalties for late
filing. He elaborated that penalties and interest were
charged to late filers. Currently, filing taxes was much
easier than when the incentives were initially implemented.
Representative Pruitt wanted to understand the tax system
in a historical context. He confirmed that currently an
incentive and a penalty was in place. He deduced that
currently incentives were less necessary due to the ease of
filing. Mr. Burnett responded in the affirmative.
2:05:32 PM
Representative Munoz asked what the amount of the gambling
tax collected by the state was. Mr. Burnett responded that
he would follow up with the answer. Representative Munoz
asked what the amount of revenue was generated through the
gambling tax. Mr. Burnett could not recall the exact amount
and pledged to provide the answer.
Representative Munoz asked why the sponsor decided to
remove the deduction of federal taxes from gambling
proceeds. Mr. Anderson responded that typically, state
taxes were deducted from federal taxes and not the other
way around. He indicated that the change was suggested to
align with the state's tax structure. Representative Munoz
asked if the state was assessing the tax on the federal
portion of gambling proceeds as well. Mr. Anderson deferred
to Mr. Burnett.
Mr. Burnett explained that DOR assessed a tax based on all
of the revenues earned on gambling in state waters.
Currently, the federal tax paid was deducted prior to
determining the state tax. The legislation would levy the
tax on the entire earnings and the federal tax would be
levied on the revenue less the state tax, which was aligned
with how the department collected most other taxes.
Representative Edgmon had questions regarding the
Commercial Fisheries Entry Commission (CFEC). He cited page
48 from the Indirect Expenditure Report and asked where the
233 individuals eligible for the reduced permit fees were
located in the state.
BEN BROWN, COMMISSIONER, COMMERCIAL FISHERIES ENTRY
COMMISSION, DEPARTMENT OF FISH AND GAME, replied that he
unaware of the specific geographic regions the individuals
resided in and offered to provide the information. He
guessed that many of the individuals resided in rural
Alaska.
Representative Edgmon wondered what the impact of the
additional costs of the permit fees would have on the areas
where the individuals resided. He wondered what the reduced
fee amounted to per individual.
Mr. Brown indicated that the reduction was 50 percent and
fees ranged from $75 to $3000 depending on the statutory
formula. Therefore, the reduction for a $3000. fee was
substantial. He believed that elimination of the fee
reduction was "relative" and that collectively was "not
that much for the department ($17,921.) but could be a
hardship for the individual.
2:12:26 PM
Representative Gara asked whether there was any other tax
that operated like the gambling tax; allowing a deduction
of federal taxes before paying state taxes. Mr. Burnett was
not aware of any other tax similarly levied in the state.
Representative Gara stated that he was having difficulty
understanding the statue references from the indirect
expenditure report concerning exploration incentive credits
and what credits were terminated in HB 155. He expressed
confusion and wanted to ensure the wrong credit was not
being eliminated. Discussion ensued among the committee
members in an attempt to clarify the issue.
Co-Chair Thompson acknowledged that the issue was
complicated and pointed out that his staff was available to
answer committee member's questions.
Representative Gara asked for confirmation that AS
38.05.180 (i), the exploration credit designated for
elimination in the bill had not been used in over a decade.
Mr. Burnett responded in the affirmative.
2:19:30 PM
HB 155 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|