Legislature(2013 - 2014)BARNES 124
04/04/2013 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB193 | |
| HB174 | |
| Presentation: Fy 2014 State Plan for the Community Services Block Grant Program | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 174 | TELECONFERENCED | |
| *+ | HB 193 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 193-MUNICIPAL TAXATION OF TOBACCO PRODUCTS
8:03:56 AM
CO-CHAIR LEDOUX announced that the first order of business would
be HOUSE BILL NO. 193, "An Act relating to the joint
administration of tobacco taxes by the state and a
municipality."
8:04:14 AM
DIRK CRAFT, Staff, Representative Lance Pruitt, Alaska State
Legislature, began by informing the committee that HB 193 was
brought forward by Anchorage to help create a more efficient
process to collect tobacco taxes. He clarified that HB 193
isn't an increase or decrease in the tobacco tax rather it's
creating a more efficient process by partnering with the
Department of Revenue (DOR) to help municipalities that collect
tobacco taxes. Section 1 amends AS 43.05.230 under the
administration of revenue laws such that it allows the state to
share tax information it collects with municipalities for the
purposes of tax collections. Section 2 amends AS 43.50.150,
the administration of the Cigarette Tax Act, that allows
municipalities in the state to jointly collect both state and
municipal tobacco taxes and also allows for the joint auditing
and distribution of stamps and collection of money on those
stamps.
8:06:21 AM
DAN MOORE, Treasurer, Treasury Division, Municipality of
Anchorage, agreed that Section 1 of HB 193 would allow
information sharing that would allow the state to coordinate and
be more efficient and effective with taxes that are common to
both state and local jurisdictions, which are the tobacco tax
and the rental vehicle tax. Although there is information
sharing from discovery or audits in relation to tax evaders, the
information remains confidential on the state and municipal
side. This sharing of information allows the full enforcement
of the tax at the state and local level. The principle of
Section 1 is based on a similar one that exists in the statute
of many states that allow the state to share information with
the local jurisdiction. Section 2 is focused on the tobacco tax
and the use of the tobacco tax stamp. He noted that other
jurisdictions in the nation, particularly in larger
jurisdictions with major populations, use what he referred to as
a "joint/combo tobacco stamp." The Municipality of Anchorage
doesn't currently have a tobacco tax stamp, but may want one in
the future. Discussions with private industry have made it
clear that it would be very problematic to have two separate
stamps, a city stamp and a state stamp, on a single pack of
cigarettes. Discussions with a major stamp vendor revealed,
however, that it is possible to create a single joint stamp
representing that the tax has been paid to both the state and
the city. In this situation in which part of the goal is to
gain efficiency, besides just a single joint stamp, Mr. Moore
requested that the state DOR be the central administrator of a
joint tobacco tax stamp program. Therefore, the private
industry would have a one-stop shop in terms of acquiring the
stamps and remitting the funds. The state would then collect
funds on behalf of local jurisdictions and then pay the local
jurisdictions each month. Section 2 requests authority for DOR
to enter into individual agreements with local jurisdictions so
that the terms can be laid out in advance, before a joint
tobacco tax stamp is even considered. A key provision within a
memorandum of understanding (MOU) would be the cost
reimbursement from the local jurisdiction that would ask the
state to issue tobacco stamps and collect money on their behalf.
He pointed out that the fiscal note is focused on Section 2 and
shows the cost impact if there were no reimbursement. However,
page 2 of the fiscal note specifies that if there is a formal
agreement in which jurisdictions agree to reimburse costs, there
would be no costs to Section 2. He related that the
Municipality of Anchorage is fully committed to reimbursing any
incremental cost that is caused by the request to partner with
the state on a joint tobacco tax stamp, and thus the legislation
would be cost neutral to the state.
8:11:15 AM
REPRESENTATIVE HERRON inquired as to how much additional revenue
Anchorage would realize if this MOU was entered into.
MR. MOORE pointed out that the MOU is particular to the tax
stamp program in that it's a matter of more efficiently
collecting the money. Section 1, he stated, provides more of an
opportunity for increased revenue because with information
sharing the city or the state can talk about things they have
found in terms of tax evasion and that can be shared because the
tax is owed on both the state and city side. In terms of
quantifying Section 1, Mr. Moore estimated that if there was 5
percent tax evasion with cigarettes in Anchorage and $22 million
a year is collected from the cigarette tax, 5 percent of that is
about $1 million per year of revenue that could be recovered or
realized as a result of joint audit information sharing.
Furthermore, it sends a message that the state and cities are
more coordinated and effective in enforcing the tobacco tax law.
Although it's more difficult to estimate or quantify leakage or
abuse, the same can be said about car rental taxes. In fact, in
recent years the state had a major finding in a rental vehicle
agency in Anchorage that amounted to $600,000 of unpaid state
tax. Unfortunately, since the information sharing statute
didn't exist, Anchorage couldn't recover what was found in the
state's audit. The [Municipality of Anchorage] performed its
own audit, albeit it didn't cover as broad a range as the
state's audit, and thus the municipality lost out on the
collection of revenue legally due to it. Mr. Moore then
mentioned that the information sharing is reciprocal, such that
if the state agrees to share with a local [municipality] its
local code includes sharing with the state.
8:14:20 AM
REPRESENTATIVE HERRON inquired as to how many wholesalers would
apply this tobacco tax stamp.
MR. MOORE answered that there are five or less entities that do
stamping of which three to four do their own direct stamping and
one to two that do stamping on behalf of many entities.
8:15:51 AM
CO-CHAIR LEDOUX, upon determining no one else wished to testify,
closed public testimony.
8:16:03 AM
CO-CHAIR NAGEAK moved to report HB 193 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, it was so ordered.
The committee took an at-ease from 8:16 a.m. to 8:18 a.m.