Legislature(1993 - 1994)

04/06/1993 01:00 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  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.                                                                         
                                                                               

Document Name Date/Time Subjects