Legislature(2013 - 2014)SENATE FINANCE 532
02/10/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB93 | |
| SB71 | |
| HB193 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 93 | TELECONFERENCED | |
| + | SB 71 | TELECONFERENCED | |
| + | HB 193 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 193(FIN)
"An Act relating to the joint administration of
tobacco taxes by the state and a municipality."
10:31:15 AM
DIRK CRAFT, STAFF, REPRESENTATIVE LANCE PRUITT, introduced
SB 193. He stated that Passage of CS HB 193 seeks to
promote greater cooperation and reciprocal information
sharing between State and local jurisdictions in Alaska
resulting in more efficient and effective oversight,
enforcement and collection of commonly assessed, legally
due taxes (e.g., tobacco tax and rental vehicle tax).
The result of information sharing between State and local
jurisdictions is that tax evasion by businesses and
individuals will be less likely to occur, thereby promoting
a more competitive business environment for Alaskan
businesses and decreasing tax subsidization caused by
willful tax evaders who otherwise shift the tax burden to
law abiding citizens. Such joint information sharing
between state and local government is a commonly authorized
practice in many other state statutes. The proposed change
to state statutes is comprised of two sections. The first
section amends existing language to add political
subdivisions of the State to the list of entities with
which the State can share information. Implementation is
expected to be cost neutral and should produce additional
revenue through shared results of discovery efforts and
audits. The second section of the CS HB 193 authorizes the
State of Alaska Department of Revenue (Department) to enter
into an agreement such as a Memorandum of Understanding
(MOU) with a municipality, authorizing the Department to
act as central administrator of any potential joint tobacco
tax stamp program which meets their economy of scale
criteria. The purpose of section two of the bill is to
promote efficiency with respect to any potential joint
tobacco stamp program, and to minimize impact on private
sector stamp purchasers. Program administration by the
Department would include central issuance of joint tobacco
stamps as well collection of associated tobacco stamp
revenues on behalf of a municipality. The cost causer -
cost payer principle would be in effect, such that a
participating municipality would be responsible for
reimbursing the Department for direct, incremental cost
increases resulting from a joint tobacco tax program. A
number of jurisdictions, particularly in more largely
populated city areas around the country, have multi-
jurisdictional tobacco stamps in use based on economies of
scale.
Vice-Chair Fairclough wondered why the state was incurring
an additional cost on behalf of municipalities. Mr. Craft
stated that the Department of Revenue (DOR) might be better
suited to answer the question.
Senator Olson inquired what the vendors thought of the
bill. Mr. Craft replied that he understood that there was
no opposition from the vendors.
10:35:00 AM
DANIEL MOORE, TREASURER, MUNICIPALITY OF ANCHORAGE,
ANCHORAGE (via teleconference), spoke in support the
legislation. He stated the bill served two purposes. It was
an information sharing bill as well as. It made sense for
the state to administer the program on behalf of the
municipalities. He expressed that there had been concern
that had been voiced by lobbyists regarding the information
sharing portion of the bill; however, language had been
developed that had led to a consensus between all parties
and he hoped that the committee would consider adopting it.
He referenced a letter of support from the Municipality of
Anchorage (copy on file):
The Municipality strongly supports passage of HB 193
which benefits municipalities in Alaska by promoting
greater cooperation and reciprocal information sharing
between State and local jurisdictions concerning
administration and enforcement of commonly assessed,
legally due taxes. The primary concept behind this
legislation is consistent with joint information
sharing practices cited in many other state statutes.
HB 193, if passed, will result in more efficient and
effective oversight, enforcement and collection of
taxes assessed by both the State of Alaska and
municipalities (i.e., enforcement of tobacco tax and
rental vehicle tax). Overall revenue realization by
the State and municipalities is likely to be
strengthened through shared results of discovery
actions and audits. and more coordinated
administration and enforcement of these commonly
assessed taxes will serve to notably reduce tax
evasion, thereby: (1) promoting a more competitive
business environment for Alaskan businesses; and (2)
decreasing the tax subsidization caused by willful tax
evaders who otherwise shift tax burden to law abiding
citizens.
In summary HB 193 is sound legislation that encourages
greater intergovernmental efficiency and effectiveness
in fulfilling tax collections mandated by law at both
the State and local level. This bill levels the
playing field for law abiding businesses and citizens
by helping to reduce the number of willful tax evaders
not paying their fair share of legally due taxes.
10:40:45 AM
Vice-Chair Fairclough looked at the fiscal note, and
wondered if the Municipality of Anchorage was prepared to
take on the additional cost. Mr. Moore replied that he
provided previous testimony that state that Anchorage would
evaluate the cost of the program at the time it was ready
to pursue a local stamp option. He remarked that there were
other considerations such as inflation proofing that were
already built into its tobacco tax. He felt that there
would need to be an analysis in order for Anchorage to sign
on to covering the additional cost. He furthered that if
multiple jurisdictions participated in local stamp
programs, it would make it more affordable and cost-
beneficial for Anchorage.
Co-Chair Meyer CLOSED public testimony
Vice-Chair Fairclough wondered if the fiscal note should be
amended to show a change of revenue on the positive of
$136,700, which would require the department to wait to set
up the person until the revenue was received by the
requestor.
JOHANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE (via teleconference), responded that Vice-Chair
Fairclough had a fair assessment of the fiscal note. She
furthered that she was directed to estimate the cost if
municipalities wanted to enter into a memorandum of
agreement with the state to administer a tax stamp on their
behalf. Instead of showing the tax stamp as revenue, it
would be shown as a designated general fund that would be
reimbursed from the municipalities.
Senator Olson queried the frequency of flexibility
recommendations at the cost detriment to the state. Ms.
Bales replied that there were not many programs that worked
directly with the government.
Senator Olson wondered how often investigations occurred
with large sums of money at stake. Ms. Bales responded that
most investigations did not deal with millions of dollars,
but shared that there were some vehicle rental cases that
were in the hundreds of thousands of dollars range.
Vice-Chair Fairclough shared that the Division of Motor
Vehicles (DMV) had taxation, and wondered if there may be
dual taxation. She asked Ms. Bales to be prepared for that
type of discussion at a later meeting.
CS HB 193(FIN) was HEARD and HELD in committee for further
consideration.