04/18/2005 09:00 AM Senate FINANCE

9:25:33 AM                                                                                                                    
                                                                                                                                
     SENATE JOINT RESOLUTION NO. 11                                                                                             
     Urging the United States Congress to amend the tax code to                                                                 
     repeal the federal excise tax on communications.                                                                           
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
DAVE STANCLIFF, Staff to  Senator Gene Therriault, gave a history of                                                            
this tax  established  in 1878,  repealed twice  then reenacted  and                                                            
amended several  times. Senator Therriault deemed  this resolution a                                                            
"valuable  message to send  on behalf of  Alaskans", who pay  almost                                                            
$17 million  annually in the form  of this tax. This federal  excise                                                            
tax on communications is also known as the "talking tax".                                                                       
                                                                                                                                
9:26:44 AM                                                                                                                    
                                                                                                                                
Co-Chair Green asked the impact of the repeal of this tax.                                                                      
                                                                                                                                
9:26:58 AM                                                                                                                    
                                                                                                                                
Mr. Stancliff  replied that "the little column" on  customers' phone                                                            
bills would "disappear"  along with the three-percent  tax. He spoke                                                            
to concerns by  members of Congress that this tax  would be expanded                                                            
and imposed on Internet services not currently taxed.                                                                           
                                                                                                                                
9:27:36 AM                                                                                                                    
                                                                                                                                
Co-Chair Green clarified  this resolution does not address the issue                                                            
of taxation of Internet services.                                                                                               
                                                                                                                                
9:27:44 AM                                                                                                                    
                                                                                                                                
Mr. Stancliff  affirmed this resolution  requests the repeal  of the                                                            
luxury tax.                                                                                                                     
                                                                                                                                
9:27:53 AM                                                                                                                    
                                                                                                                                
Senator Olson  asked the negative  impact of repealing this  tax and                                                            
what programs would be  eliminated or reduced if not funded from the                                                            
revenues generated.                                                                                                             
                                                                                                                                
9:28:09 AM                                                                                                                    
                                                                                                                                
Mr. Stancliff  replied this is a general  tax of three percent  that                                                            
is imposed on  local telephone service, toll service,  Teletype, and                                                            
exchange  service.  Revenues  from this  tax  are deposited  to  the                                                            
general  fund.  If  repealed,  Alaskans  would be  relieved  of  $17                                                            
million in taxes  paid. It is difficult to ascertain  the allocation                                                            
of all the revenues.                                                                                                            
                                                                                                                                
9:29:03 AM                                                                                                                    
                                                                                                                                
Senator Olson  wanted to ensure that  no telecommunication  programs                                                            
would suffer.                                                                                                                   
                                                                                                                                
9:29:19 AM                                                                                                                    
                                                                                                                                
Mr.    Stancliff   had    detected    no   opposition    from    the                                                            
telecommunications industry.                                                                                                    
                                                                                                                                
9:29:48 AM                                                                                                                    
                                                                                                                                
Senator Stedman commented  about migration to Internet phone service                                                            
from traditional long distance  telecommunications. He asked if this                                                            
should be addressed in this resolution.                                                                                         
                                                                                                                                
9:30:11 AM                                                                                                                    
                                                                                                                                
Mr. Stancliff understood  concerns that as communication through the                                                            
Internet  increases, the  revenue generated  by this  tax would  not                                                            
continue unless  the tax is expanded to Internet services.  Congress                                                            
has  been considering   this issue  for  several  years.  Interested                                                            
parties from both sides  of the issue have been involved and to date                                                            
no changes have  been made. The repeal of this tax  would not impact                                                            
the any issues currently before Congress.                                                                                       
                                                                                                                                
9:31:06 AM                                                                                                                    
                                                                                                                                
Co-Chair Green clarified  the repeal of this tax would not result of                                                            
any  reduction  in federal  funding  appropriated  in  the state  of                                                            
Alaska.                                                                                                                         
                                                                                                                                
Mr. Stancliff affirmed.                                                                                                         
                                                                                                                                
9:31:31 AM                                                                                                                    
                                                                                                                                
Senator  Stedman offered  a  motion to  report the  resolution  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
There was  no objection and  SJR 11 MOVED  from Committee with  zero                                                            
fiscal note #1 from the Department of Revenue.