HB 167-GOLD AND SILVER SPECIE AS LEGAL TENDER  8:21:31 AM CO-CHAIR HANNAN announced that the final order of business would be HOUSE BILL NO. 167, "An Act relating to specie as legal tender in the state; and relating to borough and city sales and use taxes on specie." 8:21:41 AM REPRESENTATIVE MCCABE, as prime sponsor, presented the second hearing of HB 167. He stated that he had not received any letters of opposition, and that he was interested in hearing public testimony. He said that over the past century, currencies have had their values wiped out, and for this reason, many people hold some gold and silver; however, it may be difficult to spend a theoretical one ounce of gold on something like bread due to the merchant not having enough cash to make change. Using coin as currency will allow the ability to spend money if the merchant accepts it, while meeting constitutional requirements for the state to utilize it. Should the bill pass, the state can then build up a specie and create a State of Alaska Goldback. 8:24:19 AM CO-CHAIR HANNAN opened public testimony on HB 167. After ascertaining that no one wished to testify, she closed public testimony. REPRESENTATIVE MCCABE expressed appreciation for the opportunity to bring the bill forward and welcomed questions from committee members and their constituents. 8:25:50 AM REPRESENTATIVE MCCARTY noted that specie does not have a denomination to it. He asked whether there is an online mechanism to see the value of the specie at the time of a transaction. REPRESENTATIVE MCCABE confirmed there are a number of websites that list the price of gold. He further noted that it is typical of vendors to negotiate or "barter." 8:27:37 AM CO-CHAIR SCHRAGE brought up the fluctuating value of assets. He shared an example of $1,000 not having the same spending power as it once did. He asked whether one would be required to pay taxes on a Goldback that gains worth over time. REPRESENTATIVE MCCABE gave a personal example of his gold coins through Oxford Assaying in Anchorage, Alaska, and explained that when a person buys a gold coin, there is nothing else involved; however, when the person sells a gold coin, there is paperwork involving reporting to the Internal Revenue Service (IRS). CO-CHAIR SCHRAGE expressed concern over the ability for the "mom and pop" shops that may not have the business experience or organization to track the gold and silver purchases. REPRESENTATIVE MCCABE reminded the committee that one of the purposes of the bill was to prevent taxation of [gold and silver] when used as legal tender. He expounded and shared an example. 8:33:29 AM REPRESENTATIVE PRAX shared his understanding that historically, gold and silver was intended to be the medium of exchange for the entire country; however, the federal government changed course. He said it would be great if Alaska could participate in reestablishing gold and silver specie as the medium of exchange. He further commented on his region, North Pole, Alaska, having a sales tax, and explained that no one would ever open a coin shop or gold exchange because of the tax. He opined that the same goes for Juneau, Alaska. CO-CHAIR HANNAN clarified that Juneau has had several gold coin sellers and buyers in seasonal businesses. She noted the sale of gold bullion. REPRESENTATIVE MCCABE explained that if Goldbacks were sold as a collectible in Juneau, it would be taxable; however, not when used as a medium of exchange. REPRESENTATIVE MCCARTY expressed concern about compensation for the devaluation and taxation of money. 8:43:02 AM CO-CHAIR SCHRAGE asked whether this would eliminate the need to report and be taxed on capital gains. He offered his understanding that the proposed legislation would eliminate the sales tax but not the capital gains tax. REPRESENTATIVE MCCABE confirmed that is correct. CO-CHAIR SCHRAGE recognized that in the U.S. there is a tremendous benefit for not being on gold standard. He supported the idea of removing the sales tax; however, he said there is a lot to consider about the bill. 8:45:18 AM CO-CHAIR HANNAN referred to the study by the House Finance Committee and asked how it was conceived. 8:46:08 AM ANGELA STEPHL, Staff, Representative Kevin McCabe, Alaska State Legislature, on behalf of Representative McCabe, prime sponsor of HB 167, responded to Co-Chair Hannan's question and explained that Legislative Legal Services conceptualized the idea from other states and suggested that in Alaska, the legislature have control over the study, and recommended it be performed by the House Finance Committee. CO-CHAIR HANNAN pointed out that the House Finance Committee is a singular committee on one side of a bipartisan structure. She shared her understanding that typically, external research contracts were handled by the [Legislative Council]. MS. STEPHL said that could be changed. She reiterated that it was a suggestion by Legislative Legal Services. 8:47:12 AM REPRESENTATIVE MCCABE stated that it was not the intention to exclude the Senate Finance Committee. He suggested that an amendment could be created to list both the Senate and House Finance Committees or some sort of joint committee. [HB 167 was held over.]