Legislature(2017 - 2018)ADAMS ROOM 519
02/21/2018 01:30 PM FINANCE
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HOUSE BILL NO. 96 "An Act amending the calculation of adjusted gross income for purposes of the tax on gambling activities aboard large passenger vessels; repealing a provision allowing an investigation expense under the Alaska Small Loans Act to be in place of a fee required under the Alaska Business License Act; repealing the amount that may be deducted from the tobacco excise tax to cover the expense of accounting and filing for the monthly tax return; repealing the discount on cigarette tax stamps provided as compensation for affixing the stamps to packages; and providing for an effective date." 2:24:20 PM REPRESENTATIVE STEVE THOMPSON, SPONSOR, thanked the committee for hearing the bill. He detailed that an indirect expenditure was a state discount or tax credit that was never tracked and did not show up in the budget. During a prior session the legislature established a way to track indirect expenditures. The Department of Revenue (DOR) must provide a report every two years on all the state's foregone revenue. The information was subsequently turned over to the Legislative Finance Division (LFD) who examined the data and published a printed report for every legislator. He noted that some of the indirect expenditures had sunsets. The items in HB 96 did not contain sunsets. He indicated that there were four items that amounted to over $350,000 in lost revenue to the state. FORREST WOLFE, STAFF, REPRESENTATIVE STEVE THOMPSON, provided further detail about the bill. He read from prepared remarks as follows: House Bill 96 repeals or removes four minor indirect expenditures from state law, all of which should provide more income for the state of Alaska. First, HB 96 removes the deduction of federal taxes from adjusted gross income when calculating the state tax collected on gambling aboard large cruise ships. Next, HB 96 repeals a provision allowing an investigation expense under the Alaska Small Loans Act to replace a fee required under the Alaska Business License Act. Finally, HB 96 repeals allowing the costs of accounting and filing monthly tax returns to be deducted from the tobacco excise tax, as well as the $50 discount on cigarette tax stamps intended to be compensation for affixing the stamps to packages. Mr. Wolfe reiterated that the bill was estimated to increase revenue in FY 19 by at least $339,500 thousand of which $219.1 thousand would be appropriated into the general fund. 2:29:12 PM Co-Chair Seaton pointed to a handout that contained three components to the bill and not four as stated earlier [titled "Bills Related to Indirect Expenditures" dated February 3, 2017 (copy on file)]. Mr. Wolfe replied that the document had been compiled the past year that included three of the four items in the bill. The third item contained two indirect expenditures. 2:30:20 PM Co-Chair Foster OPENED public testimony. GHERT ABBOTT, SELF, KETCHIKAN, spoke in support of the tobacco tax portions of the bill. Eliminating the indirect expenditure saved the state a small amount of money and slightly increased the price of a pack of cigarettes. She pointed out that foregone revenue only provided a "miniscule" amount of revenue relative to the entire budget and was no substitute for what she deemed was necessary; a broad based progressive tax on income and capital gains. She hoped the committee would not spend much time on indirect expenditure legislation. Co-Chair Foster CLOSED public testimony. Co-Chair Foster relayed the amendment deadline. HB 96 was HEARD and HELD in committee for further consideration. Co-Chair Foster reviewed the agenda for the following day. Representative Wilson hoped to receive answers regarding the supplemental bill prior to reporting it out of committee. Co-Chair Foster agreed. Co-Chair Seaton noted that some of the questions may have been more policy related than numerical.