Legislature(2021 - 2022)ANCH LIO DENALI Rm
07/13/2021 01:00 PM House WAYS & MEANS
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| Audio | Topic |
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| Start | |
| Presentation: a Review of Alaska's Revenue Sources and Tax Exemptions | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
Anchorage, Alaska
July 13, 2021
1:07 p.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool (via teleconference)
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story (via teleconference)
Representative Mike Prax (via teleconference)
Representative David Eastman (via teleconference)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: A REVIEW OF ALASKA'S REVENUE SOURCES AND TAX
EXEMPTIONS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
COLLEEN GLOVER, Director
Tax Division
Department of Revenue
POSITION STATEMENT: Presented a PowerPoint titled "Tax Programs
and Tax Exemptions Presentation," dated 7/13/21.
NICOLE REYNOLDS, Deputy Director
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint titled "Tax
Programs and Tax Exemptions Presentation," dated 7/13/21.
MIKE BARNHILL, Deputy Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions during the presentation.
ACTION NARRATIVE
1:07:03 PM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 1:07 p.m. Representatives
Josephson, Schrage, Eastman (via teleconference), Story (via
teleconference), Wool (via teleconference), were present at the
call to order. Representative Prax (via teleconference) arrived
as the meeting was in progress. Representative Edgmon (via
teleconference) was also present.
^PRESENTATION: A review of Alaska's Revenue Sources and Tax
Exemptions
PRESENTATION: A review of Alaska's Revenue Sources and Tax
Exemptions
1:07:48 PM
CHAIR SPOHNHOLZ announced that the only order of business would
be a presentation on Alaska's revenue sources and tax exemptions
by the Department of Revenue (DOR).
1:08:46 PM
COLLEEN GLOVER, Director, Tax Division, explained that the Tax
Division of the Department of Revenue (DOR) collects revenues
for the State of Alaska's 25 programs.
1:09:35 PM
MS. GLOVER presented slide 2, "Agenda," which read as follows
[original punctuation provided]:
1. FY 2020 Tax Revenue Collections
2. Summary of Tax Programs
3. Tax Exemptions
1:10:25 PM
MS. GLOVER presented slide 3, "FY 2020 Revenue Collections by
Tax Division," which read as follows [original punctuation
provided]:
? Includes all Revenues collected by the Tax Division.
? Includes all amounts before any sharing with local
governments.
? Includes all amounts before any sharing with other
State Agencies.
? Includes all amounts before any distributions to
designated/dedicated funds (i.e., Alcohol & Other Drug
Abuse Treatment and Prevention Fund, Marijuana
Education Treatment Fund.
? Property tax revenues are net of the credits for
local government property taxes paid to local
municipalities.
1:11:22 PM
MS. GLOVER presented slide 4, "FY 2020 Revenue Collections by
the Tax Division," which displayed a chart showing tax revenues
by type for fiscal year (FY) 2020. Oil & gas production tax &
surcharges comprised 44.3 percent of total revenues, followed by
corporate income tax and oil and gas property tax. Tax revenues
totaled $1,125,438,143.00. She commented that there isn't a
correlation between the number of taxpayers and the total amount
of taxes, noting that there were only 47 payers of the oil & gas
production tax & surcharges, while charitable gaming comprised
over 1,000 taxpayers, generating only 0.2 percent of total tax
revenue.
1:12:32 PM
CHAIR SPOHNHOLZ noted that tax revenue is approximately 25
percent of the state's unrestricted revenue; she noted that the
Alaska Permanent Fund provides approximately $3 billion in
unrestricted revenue compared to the $1.125 billion in tax
revenues.
1:12:57 PM
REPRESENTATIVE WOOL noted that the oil and gas property tax
revenue goes to the boroughs, and he asked how much the state
nets out of the $1.125 billion. He noted tax revenue from
marijuana at $24 million, and he recalled learning that actual
tax revenue from marijuana was $32 million, with 25 percent
earmarked for recidivism reduction.
MS. GLOVER replied that the oil and gas property tax, totaling
approximately $125 million, is the state's net; typical tax
collections in that category, she said, are approximately $560
million annually. She then noted that the chart on slide 4
shows the net amount of revenue to the state.
1:15:11 PM
REPRESENTATIVE JOSEPHSON asked whether any of the tax revenues
under discussion are swept into the Constitutional Budget
Reserve (CBR).
MS. GLOVER said she would find out.
1:15:56 PM
REPRESENTATIVE STORY commented that it would be helpful to know
when each category's tax rate was last adjusted.
CHAIR SPOHNHOLZ said she thinks that topic will be addressed
later in the presentation.
REPRESENTATIVE STORY asked whether it's possible to compare the
tax rate to the gross revenue for each category.
MS. GLOVER offered to follow up on that question.
REPRESENTATIVE STORY said it would be helpful to know how
Alaska's taxes compare to other states for similar industries.
1:18:17 PM
MS. GLOVER continued to slide 6, "Summary of Tax Programs,"
which read as follows [original punctuation provided]:
Summary of Tax Programs
1. Natural Resources
2. Entertainment & Gaming
3. Business & Utilities
4. Tourism & Transportation
5. Fishing
MS. GLOVER presented slide 7, "Tax Programs: Natural Resources,"
which read as follows [original punctuation provided]:
? Oil & Gas Production Tax
? Tax on oil and gas production
? Tax does not apply to royalty barrels
? Taxed at the segment level (North Slope and
Cook Inlet Fields)
? Net Profits Tax of 35% with minimum floor of 4%
gross.
? Last major statutory change was SB21 enacted in
2013.
? Other changes in 2014 (SB138), 2016 (HB247),
and 2017 (HB111).
? Oil & Gas Property Tax
? Tax on oil and gas property owners / operators.
? Tax rate is 20 mils (or 2%) of assessed value.
? Municipalities can levy property taxes at same
rate it taxes all non-oil and gas property
(credit towards state tax)
? Tax enacted in 1973.
MS. GLOVER pointed out that the oil & gas production tax is an
annual tax, with taxpayers required to file monthly estimated
returns.
1:22:46 PM
MS. GLOVER continued to slide 8, "Tax Programs: Natural
Resources (cont.)," which read as follows [original punctuation
provided]:
? Oil & Gas Corporate Income Tax
? Tax paid by Oil & Gas C-Corporations
? Tax on net Alaska taxable income
? Oil & Gas taxpayers report their income on a
worldwide basis
? A few exclusions/deductions from Federal Tax
Laws
? Mining License Tax
? Tax paid by businesses engaged in mining
activities
? Taxes levied on mining net income and royalties
over $40,000
? Tax enacted in 1913. Tax rates unchanged since
1955.
MS. GLOVER pointed out that the oil & gas corporate income tax
is an annual tax, with taxpayers required to file monthly
estimated returns.
1:24:51 PM
MS. GLOVER presented slide 9, "Tax Programs: Natural
Resources Historical Revenues," which displayed a graph
showing a 20-year history of revenue collection of oil and
gas production and surcharges, oil and gas corporate income
tax, oil and gas property tax, and mining license tax. She
pointed out that the oil and gas property tax and the
mining license tax remained stable over the 20-year period.
1:26:29 PM
REPRESENTATIVE STORY asked why the oil and gas corporate
income tax did not rise significantly during the high
production tax years of 2007-2014.
MS. GLOVER replied that it did rise. She expressed that
the oil and gas production tax is so high that it's
difficult to show the significance of changes in the other
taxes on the same graph.
1:27:48 PM
REPRESENTATIVE WOOL noted the oil and gas property tax is
the only statewide property tax, and is a 20 percent tax
which the local municipalities can credit at the same rate.
He then asked at what rates do the property taxes for
Valdez, Fairbanks, and the North Slope get credited to the
company.
1:28:41 PM
MS. GLOVER clarified that the state gets no oil and gas
property tax for Valdez, because the municipality's
effective mil rate is 20. She said Whittier's rate is 8
mils, North Slope Borough has a mil rate of approximately
18, and the rate in Fairbanks is approximately 17.
1:29:50 PM
CHAIR SPOHNHOLZ noted that slide 29 contains a link to the
2020 annual report.
1:30:07 PM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department
of Revenue, resumed the presentation with slide 10, "Tax
Programs: Business & Utilities," which read as follows
[original punctuation provided]:
? Non-Oil & Gas Corporate Income Tax
? Tax paid by non-Oil & Gas C-Corporations
? Tax paid on Alaska net taxable income
? Apportionment based on water's edge
? Tax first enacted in 1949. Tax brackets last
changed in 2013.
? Regulatory Cost Charges
? Charge paid by regulated utilities
? Rates available on Regulatory Commission of
Alaska (RCA) website
? Charge enacted in 1992 to fund the cost of the
RCA.
1:33:12 PM
REPRESENTATIVE JOSEPHSON asked for discussion on the
accounting practices.
MS. REYNOLDS replied she would follow up.
REPRESENTATIVE JOSEPHSON pointed out that accounting
currently seems to be an afterthought.
CHAIR SPOHNHOLZ asked for the information to be sent.
1:34:53 PM
MS. REYNOLDS proceeded to slide 11, "Tax Programs: Business
& Utilities (cont.)," which read as follows [original
punctuation provided]:
? Electric Cooperative Tax
? Tax paid by qualified electric cooperatives
? Tax rate is either $0.00025 or $0.00050 per
kilowatt hour depending on the number of years in
service
? Tax enacted in 1959
? Telephone Cooperative Tax
? Tax paid by qualified telephone cooperatives
? Tax rate is either 1% or 2% of gross revenues
depending on the number of years in service
? Tax enacted in 1959
MS. REYNOLDS presented slide 12, "Tax Programs: Business &
Utilities Historical Revenues," which displayed a graph
showing revenue for the previous 20 years for non-oil & gas
corporate income tax, electric cooperative tax, regulatory
cost charges, and telephone cooperative tax. She pointed
out that corporate income tax revenues vary from year to
year due to various economic changes, while the other three
tax categories, while much lower, remained mostly steady
from FY 2001 to FY 2020.
1:37:37 PM
REPRESENTATIVE WOOL surmised that one could expect a C
corporation ("corp") like Amazon would pay state income
tax, while a company like Uber, which is not a C corp,
would pay no state income taxes. Likewise, he said, would
it be with ExxonMobil Corporation as a C corp, while
Hilcorp Alaska LLC is not.
MS. REYNOLDS confirmed that C corps doing business in
Alaska are subject to the Alaska corporate income tax,
while S corps are not.
REPRESENTATIVE WOOL asked whether Alaska received increased
income tax from a company like Amazon during the pandemic.
MS. REYNOLDS declined to divulge confidential tax
information; however, she said, any C corp doing business
in Alaska is subject to the tax.
CHAIR SPOHNHOLZ asked whether Ms. Reynolds could identify
whether a business was an S corp or C corp.
MS. REYNOLDS replied that the Tax Division cannot divulge
anything about a taxpayer.
1:40:01 PM
REPRESENTATIVE JOSEPHSON asked Ms. Reynolds about her
understanding of the policy decision to not apply the
corporate income tax to S corps.
MS. REYNOLDS responded that the policy came from the
internal revenue code.
MS. GLOVER added that, since S corps are pass-through
entities, if there was a personal income tax, S corps would
be subject to Alaska state income tax.
CHAIR SPOHNHOLZ added that when Alaska became a state,
there was a combination personal income tax with C corp
tax. The repeal of the personal income tax, she said,
created a revenue gap; the sale of BP assets, from a C
corp, to Hilcorp Alaska, LLC, which is taxed as an S Corp,
creates a gap of approximately $30 million per year.
1:41:50 PM
MS. GLOVER progressed to slide 13, "Tax Programs:
Entertainment & Gaming," which read as follows [original
punctuation provided]:
? Tobacco
? Tax paid primarily by distributors,
wholesalers, and retailers
? Tax Rates by type
? Last major statutory change in 2004. Annual
increase to cigarette tax rates in 2005, 2006,
and 2007.
? Alcoholic Beverages Tax
? Tax paid by distributors and wholesalers
? Tax Rates per gallon
? Last major statutory change in 2002
? Marijuana
? Tax paid by marijuana cultivators
? Tax Rates per ounce
? Ballot Measure to legalize and tax marijuana
cultivation passed in late 2014. First sales were
during FY2017.
MS. GLOVER noted that not included in this list are taxes
on e-cigarettes or vaping devices.
1:45:54 PM
MS. GLOVER presented slide 14, "Entertainment & Gaming
(cont.)," which read [original punctuation provided]:
? Large Passenger Vessel Gambling Tax
? Tax paid by vessel owners
? Tax rate is 33% of adjust gross income of
gambling activities aboard large passenger
vessels in the state.
? Tax enacted in 2006 by Ballot Measure
? Charitable Gaming Tax and Fees
? Annual Permit Fees $20 - $100 (paid by
permittees)
? 1% Net Proceeds Fee when gross receipts are
greater than $20,000 (paid by permittees)
? Net Proceeds to Permittees (i.e., charitable
organizations) is ~9% of gross receipts. 2020
gross receipts $291M, net proceeds $24M
? Annual Licenses $500 - $2,500 (paid by
operators, distributors, and vendors)
? 3% Pull Tab Tax (paid by pull-tab distributors)
? Last major statutory change in 1993
1:48:19 PM
MS. GLOVER presented slide 15, "Tax Programs: Entertainment
& Gaming Historical Revenues," which showed revenues from
tobacco, alcoholic beverages, marijuana, large passenger
vessel gambling, and charitable gaming taxes and fees.
Tobacco tax showed the most significant revenue but with a
significant decline in the last couple of years, and the
marijuana tax began in 2017 and has shown significant
revenue increases.
1:49:08 PM
REPRESENTATIVE WOOL surmised that hemp is not taxed as
marijuana.
MS. REYNOLDS confirmed that there is no tax on hemp.
1:49:38 PM
MS. GLOVER noted the alcoholic beverages tax has been
steadily increasing since 2002, while the charitable gaming
tax has remained steady. The large passenger vessel
gambling tax, first seen in 2009, has been steadily
increasing, reflecting the increase in cruise ship
passengers.
1:51:24 PM
CHAIR SPOHNHOLZ commented that the title "Entertainment &
Gaming" shouldn't include tobacco, as it's a highly
addictive substance that causes enormous public health
costs. She further noted that while alcoholic beverages
bring in approximately $40 million in tax revenues, they
cost the State of Alaska approximately $2.4 billion in lost
productivity as well as health care, social services, and
criminal justice costs. She pointed out that some of the
tax revenue centers are also cost drivers. She then
mentioned a possible gaming bill that could be before the
legislature in the next special session, and she asked
whether there were any developments on the proposal.
1:53:14 PM
MIKE BARNHILL, Deputy Commissioner, Department of Revenue,
said a consultant has been reviewing opportunities for
gaming expansion in the state and has prepared a
socioeconomic study to be released in the fall. He said
there is no further update on possible gaming legislation.
1:54:25 PM
MS. REYNOLDS presented slide 16, "Tax Programs: Tourism and
Transportation," which read as follows [original
punctuation provided]:
? Motor Fuel Tax & Surcharge
? Tax paid primarily by distributors and
wholesalers that hold "qualified dealer" licenses
issued by DOR
? Tax Rates & Surcharge per gallon
? Tax dates back to 1945. Tax Rates last changed
in 2004. Surcharge added in 2015.
? Consumers may claim a refund of tax and/or
surcharge for fuel used in non-taxable or
reduced-tax manners.
? Commercial Passenger Vessel Tax
? Tax is $34.50 per passenger, per voyage (paid
by vessel owners)
? Juneau & Ketchikan local taxes are credits
against state tax (pre-Dec. 17, 2007 rates)
? Tax enacted in 2006 by Ballot Measure
? Last major statutory change was in 2010
2:01:00 PM
MS. REYNOLDS continued slide 17, "Tax Programs: Tourism and
Transportation (cont.)," which read as follows [original
punctuation provided]:
? Vehicle Rental
? Tax paid by the person who provides the leased
or rented vehicle
? Tax Rates are a % of total rental/leasing fees
and costs depending on vehicle type
? Tax enacted in 2003 and effective 2004
? Tire Fee
? Fees paid primarily by tire dealerships
? Tax Rates per tire
? Tax enacted in 2003
MS. REYNOLDS proceeded to slide 18, "Tax Programs: Tourism
and Transportation Historical Revenues," which displayed a
graph showing historical revenues for tourism and
transportation tax programs. She referred to the
significant dip in motor fuel tax in 2008-2009 and
explained that the state passed legislation suspending the
motor fuel tax; other than that dip, she said, motor fuel
tax revenue has increased over the years. The commercial
passenger vessel excise tax showed a substantial increase
in revenue beginning in 2007, when the tax first went into
effect; the drop in revenue beginning in 2010 was when the
tax rate was dropped from $46.00 to $34.50 per passenger.
Vehicle rental tax and tire fees remained steady after
their introduction, she said.
2:06:11 PM
CHAIR SPOHNHOLZ noted that in 2001-2003 price of oil was
$18-$24 per barrel, with the tire fee and vehicle rental
taxes going into effect in 2004.
2:06:32 PM
MS. REYNOLDS presented slide 19, "Tax Programs: Fishing,"
which read as follows [original punctuation provided]:
? Fisheries Business Tax
? Tax paid primarily by fisheries businesses and
persons who process fishery resources in, or
export unprocessed fisheries resources from,
Alaska
? Tax Rate 1% to 5% on the value of the processed
fisheries resource. Rate depends on the type and
classification (developing or established) of
fishery resource and where the resource is
processed (shore-based or floating processor).
? Tax dates back to Territorial days. Current tax
rate structure since 2004.
? Fisheries Resource Landing Tax
? Tax paid primarily by person who engages in a
floating fisheries business in Alaska and is not
subject to the Fisheries Business Tax.
? Tax Rate is assessed on the value of the
fishery resource at the place of first landing.
? Tax Rate 1% to 3% depending on the
classification (developing or established)
? Tax enacted in 1993
2:09:35 PM
MS. REYNOLDS continued to slide 20, "Tax Programs: Fishing
(cont.)," which read as follows [original punctuation
provided]:
? Seafood Marketing Assessment
? Levy on the value of seafood products produced
in Alaska if the value of the products are
$50,000 or more in a calendar year.
? Current assessment rate is 0.5%.
? Assessment adopted in 1981
? Salmon Enhancement Tax
? Self-imposed tax paid by the fishermen and
remitted to DOR by the buyers.
? The tax applies to these regions: Southern
Southeast and Northern Southeast at 3%; Prince
William Sound, Cook Inlet, Kodiak, Chignik, and
Yakutat at 2%.
? Tax adopted in 1980
? Seafood Development Tax
? Self-imposed 1% tax paid by the fishermen and
remitted to DOR by the buyers.
? The tax applies to these areas: Bristol Bay
salmon drift gillnet, Prince William Sound salmon
drift gillnet, and Prince William Sound salmon
set gillnet.
? Tax adopted in 2004
2:13:05 PM
MS. REYNOLDS presented slide 21, "Tax Programs: Fishing
(cont.)," which read as follows [original punctuation
provided]:
? Dive Fishery Management Assessment
? Self-imposed assessment on fisheries resources
taken using dive gear in designated areas.
? Current rates for applicable species are: 7% of
value for geoduck and sea urchins, and 5% for sea
cucumber.
? Assessment enacted in 1997
? Common Property Fishery Assessment
? Allows for cost recovery of hatchery
? Only has been used for Hidden Falls Hatchery
? The current rate is zero
? Assessment adopted in 2006
2:15:01 PM
MS. REYNOLDS presented slide 22, "Tax Programs: Fishing
Historical Revenues," which displayed a graph showing
fishing program revenues from 2001-2020. She pointed out
that the fisheries business tax revenue far exceeds all
other revenue.
2:15:39 PM
REPRESENTATIVE WOOL asked whether there is a local credit
for the fishery resource landing tax.
MS. REYNOLDS replied that revenues flow to municipalities
through the community development quota (CDQ) tax credit;
such a credit reduced the municipal share of tax revenue.
The landing tax is shared with the municipality in which
the resource is first landed, she said.
REPRESENTATIVE WOOL surmised that the municipal tax is
independent of the state tax, and if a taxpayer pays a CDQ
amount, it gets reduced from the municipal tax; the state
tax, however, always goes to the General Fund.
MS. REYNOLDS said 50 percent of the state tax revenue is
shared with the municipality, so CDQ credits go against the
municipality's share of revenue.
REPRESENTATIVE WOOL commented that 50 percent of the
landing tax, which is approximately 1-3 percent, goes to
the state, with the other 50 percent remaining with the
municipality where the fish was landed.
CHAIR SPOHNHOLZ asked whether the total on the slide is
gross revenue.
MS. REYNOLDS replied yes.
CHAIR SPOHNHOLZ added that the amount is prior to
distribution of funds to the municipality. She then noted
that some of the taxes in the fishing program are self-
imposed, and she asked whether other industries in Alaska
operate in a similar manner.
MS. REYNOLDS responded that she is not aware of other taxes
that are self-imposed.
2:20:34 PM
REPRESENTATIVE PRAX asked whether tax credits for
municipalities are designated or dedicated for a specific
purpose.
MS. GLOVER explained that most taxes are subject to
legislative appropriation.
2:21:47 PM
MS. GLOVER presented slide 23, "Tax Programs: Newest
Programs, which read as follows [original punctuation
provided]:
? New Revenue Programs in last Twenty Years
? Sorted newest to oldest
? Many of these have provisions for sharing or
are designated funds.
MS. GLOVER added that no new programs have been enacted in
the past six years. She also noted that by following the
link at the end of the presentation one can view the annual
share report, which shows actual dollars flowing to each
community.
2:23:18 PM
MS. GLOVER presented slide 24, "Tax Exemptions," and she
noted that discussing the full exemptions would be too
involved for one meeting, so she would present highlights
from the indirect expenditure report. She presented 25,
"Indirect Expenditure Reports," which read as follows
[original punctuation provided]:
Indirect expenditures are foregone revenue to the
State due to tax credits, exemptions, discounts,
deductions, and other provisions.
? Indirect Expenditure Report is published by DOR
every two years. Link to Report: Indirect Expenditure
Report (alaska.gov)
? Indirect Expenditure Books are published by
Legislative Finance every other year for specific
departments on a six-year cycle. Link to Report:
Indirect Expenditure Book (akleg.gov)
MS. GLOVER presented slide 26, "2020 Indirect Expenditure
Report: By Department," which displayed a table of indirect
expenditures listed in the report, totaling approximately
$3.9 billion. Expenditures included the Alaska Court
System, Department of Education & Early Development, and
Department of Natural Resources. She noted that it's hard
to assess the impact that would be had if these programs
didn't exist.
2:25:41 PM
MS. GLOVER presented slides 27 and 28, "Tax Exemptions: Top
Ten for Department of Revenue," which displayed charts of
the top ten tax exemptions from the most recent report.
Included in the charts was the description of the exemption
provision, as well as the number of beneficiaries. She
said "small producer" in oil and gas production is defined
as a producer of less than 50,000 barrels per day, and that
that FY 2019 revenue impact of $15 million is expected to
drop to $0 by 2026. Seven of the 10 exemptions are motor
fuel exemptions or rate reductions.
2:29:36 PM
REPRESENTATIVE EASTMAN said he expected to see oil and gas
property tax in the exemptions, and he asked why it was not
present.
MS. REYNOLDS explained that the charts showed only the top
10 exemptions by revenue impact for FY 2019.
REPRESENTATIVE EASTMAN said again that he expected the oil
and gas property tax to be included in the displayed list
of exemptions.
MS. GLOVER said any oil and gas property tax exemption
isn't something necessarily administered by the Tax
Division of the Department of Revenue.
2:32:22 PM
REPRESENTATIVE SCHRAGE referred to the $3.8 billion in
indirect expenditures by the Department of Revenue on slide
26, and he asked for an explanation of that amount.
MS. GLOVER said she would take a closer look at the number.
CHAIR SPOHNHOLZ commented that something might be missing.
2:33:32 PM
REPRESENTATIVE WOOL pointed out Alaska's motor fuel tax is
the lowest in nation, but many exemptions are still
offered. He asked whether heating oil is considered a
motor fuel, which is the reason for an exemption.
MS. REYNOLDS responded that heating fuel is not considered
motor fuel, so it's not subject to the tax. She said read
the statutory definition of "motor fuel" from AS 43.40.100,
which read as follows:
"motor fuel" means fuel used in an engine for the
propulsion of a motor vehicle or aircraft, and fuel
used in and on watercraft for any purpose, or in a
stationary engine, machine, or mechanical contrivance
that is run by an internal combustion motor;"
REPRESENTATIVE WOOL asked why heating fuel is listed as an
exemption when it's not taxed.
MS. REYNOLDS explained that fuel is often delivered into
common storage tanks at retail stations, so there's no way
of knowing what the fuel will be used for. A person can
fuel a vehicle, which has an obvious purpose, or can fill
up a can in order to power a generator. The tax is applied
at the highest rate for the common storage tanks, she said,
and a person can apply for a tax refund if it can be
established that the fuel was used for an exempt purpose.
REPRESENTATIVE WOOL agreed that it's based on honor system.
He then discussed the tax on jet fuel, and he asked whether
any exemptions are federally mandated.
MS. REYNOLDS said fuel used on flights to foreign countries
is exempt from the tax by federal mandate.
REPRESENTATIVE WOOL asked how the total of $8.5 million was
arrived at.
MS. REYNOLDS offered to follow up.
CHAIR SPOHNHOLZ asked whether the difference would be
between $.08 and $.032.
2:39:25 PM
CHAIR SPOHNHOLZ asked whether the jet fuel reduction is
federally mandated.
MS. GLOVER offered to follow up.
2:39:52 PM
REPRESENTATIVE JOSEPHSON returned to the earlier discussion
of the $3.8 billion in indirect expenditures by the
Department of Revenue, and he asked how it was derived.
MS. GLOVER described the information available in the
indirect expenditure report, and she discussed the
methodology of data aggregation. She said the number was
based on "actual tax returns and filings."
CHAIR SPOHNHOLZ expressed interest in the indirect
expenditure report.
2:41:22 PM
MS. GLOVER resumed the presentation on slide 29,
"Resources," which read as follows [original punctuation
provided]:
Information for this Presentation:
? Annual Report is published every year and contains a
historical statutory account of all tax programs as
well as the last five years of revenue collections and
taxpayer statistics.
Link to Report: 2020 Annual Tax Report
? Indirect Expenditure Report is published by DOR
every two years
Link to Report: Indirect Expenditure Report
(alaska.gov)
Other Sources of Information:
? Fall 2020 Revenue Source Book (RSB) is published by
DOR every fall.
Link to Report: Fall 2020 Revenue Sources Book
(alaska.gov)
2:43:41 PM
ADJOURNMENT
There being no further business before the committee, the
House Special Committee on Ways and Means meeting was
adjourned at 2:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOR Tax Presentation 7.13.21.pdf |
HW&M 7/13/2021 1:00:00 PM |
Presentation |