SENATE BILL NO. 240                                                            
                                                                               
"An Act repealing the tax on punchboards and coin-                             
operated amusement and gaming devices; and providing                           
for an effective date."                                                        
                                                                               
SENATOR DRUE PEARCE spoke in support of SB 240.  She                           
observed that SB 240 is an Act repealing coin operated                         
devices and the Punchboards Tax Program.   The program began                   
in 1941 as a tax on amusement machines such as billiard                        
tables, jukebox machines and pinball games.  The purpose of                    
the program was to raise revenues and track the number of                      
amusement games.  Repeal of the program would lessen the                       
burden on 250 businesses in the state and free up 400 hours                    
of Department of Revenue staff time for higher priority                        
work.  The amount of revenue lost from repealing the program                   
would be offset by money collected from increasing                             
compliance of larger tax programs.                                             
                                                                               
Senator Pearce observed that, currently, 250 businesses                        
annually file a return and pay the appropriate amount of                       
tax.  The current annual tax rate is $48 per device.  The                      
rate has remained virtually unchanged since 1947.  The                         
current program collects $90,000, shares $32,000 back to                       
local governments and costs $15,000 to operate.  Thus the                      
net general fund revenue is $43,000.  Department of Revenue                    
officials have discussed the program repeal with several                       
local government officials and the Alaska Municipal League.                    
All concurred that they could not afford to administer the                     
program locally for the small amount of revenue received.                      
She emphasized that repealing the program makes good                           
business sense and public policy.  The Department of Revenue                   
presented the matter.                                                          
                                                                               
Representative Davies asked if consideration was given to                      
increasing the tax.  Senator Pearce emphasized that the                        
program is expensive to administer.  She did not think that                    
the original intent to track the number of games and raise                     
revenues was being served by the program.                                      
                                                                               
In response to comments by Representative Grussendorf,                         
Senator Pearce pointed out that there would be a net general                   
fund loss of $43 thousand dollars.  The Department of                          
Revenue would save 400 staff hours.  The additional staff                      
time can be spent finding other tax payers who are not                         
complying with larger tax programs that bring in more money.                   
She anticipated that there would be a net gain from the                        
legislation.                                                                   
                                                                               
BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME AND EXCISE AUDIT                      
DIVISION, DEPARTMENT OF REVENUE clarified that the                             
legislation is at the request of the Department.  He                           
observed that the Department has 17 tax programs.  The                         
Department prioritized each program based on the amount of                     
money collected and the cost of the program.  The Coin                         
Operated Devices Tax Program was at the bottom of the list.                    
The recommendation to eliminate the program was made in                        
response to budget reductions.  He asserted that the                           
Department would be able to do a better job with remaining                     
programs.                                                                      
                                                                               
Representative Davis spoke in support of the legislation.                      
                                                                               
Representative Martin MOVED to report SB 240(title                             
am)(reengrossed) out of Committee with the accompanying                        
fiscal note.  There being NO OBJECTION, it was so ordered.                     
                                                                               
SB 240(title am)(reengrossed) was REPORTED out of Committee                    
with a "do pass" recommendation and with a zero fiscal note                    
by the Department of Revenue.