Legislature(1993 - 1994)
04/06/1993 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 173: MUNI FEES & TAXATION OF CHARITABLE GAMES Number 011 REPRESENTATIVE RON LARSON, PRIME SPONSOR OF HB 173, testified, "Last summer I was talking to one of my friends. My friend had a problem...and he asked us to look into the situation... In some ways we found that there are conflicting statutes. One interpretation...is that they (the city) was allowed to place a sales tax on the nonprofits. The other was that the city should not place a sales tax on it... What eventually happened then was the business was moved out of the City of Palmer, because they were interpreting the legislation one way, to the City of Wasilla, where they interpreted the legislation another way." REPRESENTATIVE LARSON continued, "So this bill is basically then just trying to set a policy that will be uniform for all of the municipalities. ...Should the money raised by charities be shared with municipalities or should the money raised by charities be used for those charities in the purposes that is expressed?... This bill (HB 173) will basically exempt from municipal sales taxes those nonprofits or charities who have the permit and who are also the operator or the seller." NUMBER 080 REPRESENTATIVE JOHN DAVIES asked if the language (on line nine of HB 173) "to the extent" could be substituted with "if". REPRESENTATIVE LARSON understood that language to mean "if the activity was carried on by the person who has the permit was also the one who was the operator". CHAIRMAN OLBERG asked, "Would it be possible to operate your own deal and also allow somebody to operate for you?" Number 106 REPRESENTATIVE LARSON replied, "What we are trying to do is narrow it down right here where the nonprofit or the charity, the one who has the permit, is the only one exempt from the sales tax." CHAIRMAN OLBERG gave an example, "So if the charity was running a bingo game and at the same time somebody else was running dart toss for them for a fee, the dart toss would not be exempt but the bingo game would, is the way I read this. To the extent that the permittee who holds the permit is actually conducting the activity." REPRESENTATIVE LARSON concurred and added, "The state does collect a sales tax on these activities. Those dollars then go to the general fund and from the general fund they are redistributed back to the municipalities. So municipalities do get some revenue from these activities." Number 133 RICK URION, LOBBYIST, CITY OF BETHEL, testified in opposition to HB 173 saying, "On one hand the legislature is restricting revenue sharing and municipal assistance and then on the other hand, you are cutting back the municipal's right to tax. We think this should be a local option and not be dictated by the state. The City of Bethel receives about ten percent of its sales tax from this type of activity. Passage of this bill would seriously restrict the ability of the city to provide the services it provides. Maybe in your wisdom, if you think this is a good idea, you could exempt the municipalities who already levy this tax." Number 154 REPRESENTATIVE JERRY SANDERS asked if the City of Bethel "gets about ten percent from this" and, "Is all the gaming in Bethel covered by this? They lose the whole ten percent?" MR. URION replied, "That is my understanding, that is what the city (Bethel) tells me, yes." REPRESENTATIVE DAVIES asked, "What fraction of their total budget would that represent?" MR. URION said, "I don't know what that is...it's about $200,000 a year is what it amounts to." Number 174 RON PAGENKOPF, JUNEAU YOUTH ACTIVITIES CO-OP, testified in support of HB 173 saying, "There are basically two problems that we have with a sales tax on gaming. One is that it is recognized throughout almost every place in the United States except Alaska, that a front end sales tax does not work with gaming. It is not possible to collect that tax from the player at the time of sale. The second problem we have is that the boroughs, or the taxing authorities, want to tax the same dollar four to five times rather than just once." He then gave the committee examples of multiple taxation of a dollar spent on gaming. Representative Williams joined the committee at 1:17 and Representative Toohey joined the committee at 1:18. MR. PAGENKOPF continued, "Our proposal is, of course we support this bill (HB 173) very heavily, but if they do wish to tax us, tax us the way the state taxes. That is on the difference between the price of the ticket and the winnings, where we pay a three percent tax to the state. We also pay a one percent tax to the state on the net revenue that we receive from gaming... The thing that scares us is that as the boroughs raise the sales tax, they will literally put us out of business and the intent of the law was to raise money for charity, was my understanding..." He then rendered further examples. Number 262 CHAIRMAN OLBERG asked, "Because you are a co-op then you are subject to this tax?" MR. PAGENKOPF said, "Everybody is subject to the tax regardless of who you are. This (HB 173) would allow us not to pay a sales tax because all we do is share a location." CHAIRMAN OLBERG clarified, "Your primary objection is not to this bill, but to the way the tax is imposed at the present time... (HB 173) in effect would preclude the borough from taxing you as they are now." MR. PAGENKOPF concurred. Number 298 REPRESENTATIVE DAVIES MOVED to PASS HB 173 out of committee with individual recommendations. There were no objections, and the MOTION CARRIED. Number 307 CHAIRMAN OLBERG called a short at ease from 1:21 to 1:23 p.m.