Tax discussion may be on tap for Alaska Legislature
As state lawmakers prepare to gavel in for work later this month, the budget and, for some, taxes are top of mind. Earlier this week, Anchorage Mayor Ethan Berkowitz pitched the idea of a community Permanent Fund dividend program to help cover responsibilities that local governments have absorbed from the state.
"I have some concerns about it. I'm open to discussing it," said Rep. Andy Josephson, D-Anchorage, suggesting instead that the state implement some sort of a broad-based tax.
Josephson argues that lawmakers have already become too reliant on the Permanent Fund's earnings, from which PFDs are paid, to cover its own budget. In 2018, the Legislature approved a framework for how to draw funds for state services.
"That's helping to stave off taxation — personal taxes, sales taxes. Many of us think we may need to go that way anyway," Josephson said.
He added that the state has drawn down on its savings and other accounts, so it needs to look at new types of revenue.
Senate President Cathy Giessel has also expressed concern about the state of the state's savings. In an interview last month, Giessel made mention of taxation as a means of funding the governor's call for a $3,000 PFD payment.
"Should we institute an income tax, even a statewide sales tax, for the sole purpose of paying a very large dividend?" Giessel said. "Or should we modernize, update that calculation that figures out what the dividend is to meet today's needs?"
In a November op-ed, former Revenue Commissioner Bruce Tangeman announced his resignation, citing a statewide conversation about taxes.
"The discussion is turning more and more toward taxes," Tangeman wrote, without going into specifics.
Currently, there is a broad-based tax proposal at play in the Legislature. Sen. Click Bishop, R-Fairbanks, introduced Senate Bill 50 to revive Alaska's education head tax by collecting $30 a year from each person employed in the state. The money would in turn be used for school construction and maintenance.
"I think there's a belief that the governor might sign a sales tax bill," said Josephson, although no such legislation has been filed.
The comment echoes that of Alaska Municipal League leadership.
"I've certainly heard sales tax coming from a lot, a variety of sources," director Nils Andreassen said in a November interview.
"I think that one of the reasons we have the problem we have is that we're the only state without a broad-based tax. That's a problem," said Josephson. “And it’s not an accident that we’ve got this dilemma and that we’re the only state without one. So I think that we need to ask the citizens, as John F. Kennedy said, to step up and see what they can do for their government."
The next legislative session begins Tuesday, Jan. 21 in Juneau.
The Anchorage Assembly is currently considering several proposals for taxation at the local level.
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