Legislature(2017 - 2018)BUTROVICH 205

04/03/2018 03:30 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 3:45 p.m. --
*+ SB 118 DISCLOSURE OF CUSTOMER INFORMATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 96 TAXES;DEDUCTIONS;FEES;TAX STAMP DISCOUNT TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 168 REPEAL ADMIN. REG. REVIEW COMMITTEE TELECONFERENCED
Moved HB 168 Out of Committee
-- Public Testimony --
+ HCR 10 UNIFORM RULES: REGULATION REVIEW TELECONFERENCED
Moved HCR 10 Out of Committee
-- Public Testimony --
+ HB 20 SOLEMNIZE MARRIAGE: ELECTED OFFICIALS TELECONFERENCED
Moved CSHB 20(JUD) Out of Committee
-- Public Testimony --
+ HB 152 ORGANIZED MILITIA; AK ST. DEFENSE FORCE TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
       HB 96-TAXES; DEDUCTIONS; FEES; TAX STAMP DISCOUNT                                                                    
                                                                                                                                
4:08:42 PM                                                                                                                    
CHAIR MEYER announced the consideration of House Bill 96 (HB
96).                                                                                                                            
                                                                                                                                
4:09:14 PM                                                                                                                    
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, Juneau,                                                                
Alaska, Sponsor of HB 96, provided an overview as follows:                                                                      
                                                                                                                                
     House Bill 96 came about  because 4 years ago we passed                                                                    
     HB  306 which  addressed indirect  expenditures and  it                                                                    
     was  passed  and it's  in  the  statutes now.  Indirect                                                                    
     expenditures are  discounts that corporations  can take                                                                    
     against their state  tax, it's a reduction  in fees and                                                                    
     things like  that that  we don't  ever see,  those fees                                                                    
     never show up in the budget,  we don't see them. So, HB
     306  required that  the Treasury  Department every  two                                                                    
     years must  make a report  showing all of  the foregone                                                                    
     revenue that  the state didn't receive  due to indirect                                                                    
     expenditures  and  discounts  and reductions  in  fees;                                                                    
     they   make  that   report,  they   turn  it   over  to                                                                    
     Legislative  Finance and  they  then  produce a  report                                                                    
     that is passed out to all  of the legislators so we can                                                                    
     see  the  lost  fees  that  we  don't  receive.  HB  96                                                                    
     addresses 4 of those  indirect expenditures and it will                                                                    
     save  the  state  or  bring  back  to  the  state  over                                                                    
     $350,000.                                                                                                                  
                                                                                                                                
He added that his staff member would address the four indirect                                                                  
expenditures that HB 96 addresses.                                                                                              
                                                                                                                                
4:10:44 PM                                                                                                                    
FORREST WOLFE, Staff, Representative Thompson, Alaska State                                                                     
Legislature, provided an overview of HB 96 as follows:                                                                          
                                                                                                                                
     HB 96 repeals or  removes 4 minor-indirect expenditures                                                                    
     from   state  law   which   would   provide  a   modest                                                                    
     [inaudible] increased  revenue to the State  of Alaska.                                                                    
     The first  removes the deduction of  federal taxes from                                                                    
     the adjusted  gross income  when calculating  the state                                                                    
     tax collected on gambling onboard large cruise ships.                                                                      
                                                                                                                                
     The second is a  provision that allows an investigation                                                                    
     of expense under the Alaska  Small Loans Act to replace                                                                    
     a  few required  under  the  Alaska Businesses  License                                                                    
     Act.                                                                                                                       
                                                                                                                                
     Third,  it   removes  a  four-tenths  of   one  percent                                                                    
     deduction  from  the tobacco  tax  for  the expense  of                                                                    
     accounting and filing of that tax return each month.                                                                       
                                                                                                                                
     Finally, the  fourth one  is it  repeals a  discount on                                                                    
     cigarette tax  stamps which was originally  intended to                                                                    
     be  compensation for  physically affixing  these stamps                                                                    
     to the packages themselves.                                                                                                
                                                                                                                                
     According   to  the   fiscal  note   provided  by   the                                                                    
     Department of Revenue, it is  estimated that HB 96 will                                                                    
     increase  revenue by  at least  $339,500 if  FY2019, of                                                                    
     which  about  $220,000  will  go  to  the  unrestricted                                                                    
     general fund.                                                                                                              
                                                                                                                                
     In  this time  of  financial  instability and  economic                                                                    
     hardship,  the state  needs to  find increased  revenue                                                                    
     where ever  it can, and  HB 96 is  a step in  the right                                                                    
     direction.                                                                                                                 
                                                                                                                                
CHAIR  MEYER asked  why the  bill  will generate  revenue to  the                                                               
state. I noted  that the state would no longer  be paying for tax                                                               
stamps to be placed on cigarettes packs.                                                                                        
                                                                                                                                
4:12:53 PM                                                                                                                    
REPRESENTATIVE  THOMPSON  explained  that the  state  pays  quite                                                               
amount of money to cigarette companies  to affix the tax stamp on                                                               
the  bottom of  the pack  of  cigarettes. He  specified that  the                                                               
expenditure was originally  put into place so  that the cigarette                                                               
companies  could pay  for the  equipment  used to  affix the  tax                                                               
stamps. He  conceded that the  tax-stamp equipment has  been paid                                                               
for many times  over and the savings would be  the largest amount                                                               
of money  from the legislation.  He added that the  discounts for                                                               
filling out  forms amounts  to some money  while the  cruise ship                                                               
tax is  indeterminate and  will be explained  by Mr.  Alper, [Tax                                                               
Division Director].                                                                                                             
                                                                                                                                
CHAIR MEYER  asked if  each tobacco company  affix tax  stamps to                                                               
their  cigarette packs  or does  a single  distributor affix  tax                                                               
stamps for all tobacco brands.                                                                                                  
                                                                                                                                
REPRESENTATIVE  THOMPSON replied  that everyone  must go  through                                                               
one machine.  He specified that  the state  must pay for  the tax                                                               
stamp to be affixed to the cigarette packs.                                                                                     
                                                                                                                                
CHAIR MEYER asked to confirm that  the state does not know if the                                                               
equipment  has  been  paid  for   and  the  equipment  payoff  is                                                               
speculation.                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON answered that if  there is a cost that is                                                               
going to  happen for affixing the  tax stamp, the cost  will have                                                               
to  be added  to a  pack of  cigarettes. He  reiterated that  the                                                               
state continues to  allow the fund to take a  very large discount                                                               
off corporate taxes.                                                                                                            
                                                                                                                                
4:15:07 PM                                                                                                                    
SENATOR GIESSEL  thanked Representative Thompson for  bringing HB
96 forward  and identifying four-indirect expenditures.  She said                                                               
she  looked at  the  indirect expenses  report  and could  hardly                                                               
believe the expenditures that were in place.                                                                                    
                                                                                                                                
SENATOR  EGAN asked  to confirm  that the  tax stamps  prove that                                                               
"it's Alaska." He  noted that he has friends  that buy cigarettes                                                               
from tribes  in Washington state  and the cigarette packs  do not                                                               
have tax stamps.                                                                                                                
                                                                                                                                
REPRESENTATIVE   THOMPSON   explained    that   cigarettes   sold                                                               
commercially in  the State  of Alaska must  have the  state's tax                                                               
stamp affixed.                                                                                                                  
                                                                                                                                
SENATOR   EGAN  replied   that  he   understood  the   tax  stamp                                                               
requirement.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON  specified  that commercial  sellers  of                                                               
cigarettes without  the state's tax  stamp are liable for  a very                                                               
large fine.  He noted that  people could possibly  buy cigarettes                                                               
online to avoid paying the tax.                                                                                                 
                                                                                                                                
SENATOR EGAN  asked if the  cigarettes sold onboard  cruise ships                                                               
have the state's tax stamp.                                                                                                     
                                                                                                                                
REPRESENTATIVE  THOMPSON  suggested  Senator Egan's  question  be                                                               
posed to Mr. Alper.                                                                                                             
                                                                                                                                
CHAIR MEYER asked how other  states deal with their cigarette tax                                                               
stamps.                                                                                                                         
                                                                                                                                
REPRESENTATIVE THOMPSON replied  that he does not  know. He noted                                                               
that  there  is a  big  movement  across  the nation  to  address                                                               
indirect expenditures  at the  state level.  He pointed  out that                                                               
indirect  expenditures do  not show  up  in a  budget and  nobody                                                               
really sees how much money that are forgone.                                                                                    
                                                                                                                                
CHAIR  MEYER asked  how  long  the state  has  been dealing  with                                                               
indirect expenditures.                                                                                                          
                                                                                                                                
REPRESENTATIVE THOMPSON suggested that  Chair Meyer's question be                                                               
posed to Mr. Alper.                                                                                                             
                                                                                                                                
4:18:14 PM                                                                                                                    
KEN ALPER, Director, Tax Division,  Alaska Department of Revenue,                                                               
Juneau, Alaska,  said three of four  items in the bill  relate to                                                               
the Tax  Division. He  explained that the  first item  relates to                                                               
the  cruise-ship-gambling  tax,  which  was a  component  of  the                                                               
initiative that put the $50 head  tax on cruise ships in the 2006                                                               
election. He  said large cruise  companies file the  gambling tax                                                               
which is  33 percent of net  profits tax on the  activities while                                                               
ships are  in state waters.  He detailed  that the tax  brings in                                                               
about $6  million per year  in general  funds. He noted  that the                                                               
cruise  ship  gambling  tax  is  one of  ten  excise  taxes  that                                                               
includes: alcohol,  tobacco, motor fuels, mining,  tires, vehicle                                                               
rental, marijuana, and remnants of the film-tax program.                                                                        
                                                                                                                                
He explained that  the two other items in the  bill relate to the                                                               
tobacco tax,  the second  item in the  bill eliminates  the four-                                                               
tenths  of one-percent  discount for  timely filing,  an activity                                                               
that is not  unusual in the taxing world. He  said the third item                                                               
is eliminating  the cigarette-tax-sticker discount.  He explained                                                               
that the tax  is unusual because the stickers are  presold to the                                                               
tobacco  distributors in  Alaska. He  detailed that  the stickers                                                               
are  discounted by  1 to  3 percent,  amounting to  approximately                                                               
$250,000. He  noted that Alaska's  cigarette tax  annually brings                                                               
in $20 million to $25 million to the state.                                                                                     
                                                                                                                                
4:22:55 PM                                                                                                                    
CHAIR  MEYER   noted  that  Senator  Egan   addressed  cigarettes                                                               
purchased  from  tribes  without   tax  stamps  and  inquired  if                                                               
military bases have similar privileges.                                                                                         
                                                                                                                                
MR. ALPER  replied that he  did not  know the military  rules but                                                               
noted that there  are maritime tax-off stamps.  He disclosed that                                                               
the  tax   division  has  a  criminal   investigations  unit.  He                                                               
concurred that there are online  sources for cigarettes and noted                                                               
that purchasing online is not  inherently illegal, but the person                                                               
that does purchase online is  obligated to pay the state's excise                                                               
tax, $20 per carton.                                                                                                            
                                                                                                                                
CHAIR MEYER asked  if Mr. Alper would like to  see any changes or                                                               
modifications to HB 96.                                                                                                         
                                                                                                                                
MR. ALPER  commented that elements  within the bill are  fine and                                                               
noted that he would not have  an issue if the committee addressed                                                               
other indirect  expenditures like  an early filling  discount for                                                               
motor  fuel. He  pointed out  that HB  399 is  a bill  that would                                                               
eliminate  some  corporate  income tax  loopholes,  savings  that                                                               
would  amount to  $6 million  to $7  million. He  summarized that                                                               
bit-by-bit it  is important  to scoop up  revenue that  is "being                                                               
left on the table," especially before adding any new taxes.                                                                     
                                                                                                                                
4:26:23 PM                                                                                                                    
CHAIR MEYER  said he questioned  the gambling  activities onboard                                                               
the cruise  ships and noted that  the calculation of the  tax was                                                               
"kind of a mystery."                                                                                                            
                                                                                                                                
MR.  ALPER pointed  out that  the  gambling tax  only applies  to                                                               
large vessels  with more  than 500 passengers  that are  in state                                                               
waters. He  remarked that the  gambling tax  is not one  that the                                                               
division  has  massive  resources   to  invest  in  auditing  the                                                               
timeclocks  on the  cruise ships'  casinos,  so a  little bit  of                                                               
trust is  involved with  the tax  collections. He  said regarding                                                               
what happens  with the deduction  of federal taxes and  not being                                                               
able to forecast their federal  taxes, predicting what the number                                                               
is hard but estimated that the  amount is in the low six figures,                                                               
a relatively small increment on top of the existing tax.                                                                        
                                                                                                                                
4:27:44 PM                                                                                                                    
CHAIR MEYER opened and closed public testimony.                                                                                 
                                                                                                                                
4:28:12 PM                                                                                                                    
CHAIR MEYER held HB 96 in committee.                                                                                            
                                                                                                                                

Document Name Date/Time Subjects
SB 118 Sponsor Statement.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Version D.PDF SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Sectional Analysis.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Support Material - Americans and Cybersecurity - Pew Research Center.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Support Material - Data Brokers-Companies Are Buying, Sharing Your Online Info-All Tech Considered - NPR.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Opposition Letter SPSC.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Support Material - Marketing Dataveillance and Digital Privacy- Ashworth and Free.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Support Material - Right to Know Act -ACLU of Northern CA.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Support Material - When Companies Sell Customer Information Gathered Through the Internet- Henderson.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Fiscal Note.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
HB 96 Sponsor Statement ver D 2.28.18.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Version D.PDF SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Supporting Documents Statutes Repealed by HB 96 2.20.18.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Supporting Documents IE HFIN DOR Subcommitee Report 2.12.18.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Fiscal Note3.OMB2476.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Fiscal Note 2.OMB2808.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 96 Fiscal Note 1.OMB2360.pdf SSTA 4/3/2018 3:30:00 PM
HB 96
HB 168 Version A.PDF SSTA 4/3/2018 3:30:00 PM
HB 168
HB 168 Sponsor Statement-2018.pdf SSTA 4/3/2018 3:30:00 PM
HB 168
HB 168-Sectional Analysis-2018.pdf SSTA 4/3/2018 3:30:00 PM
HB 168
HB 168 Version A.PDF SSTA 4/3/2018 3:30:00 PM
HB 168
HB 168 Fiscal Note.pdf SSTA 4/3/2018 3:30:00 PM
HB 168
HCR 10 Version A.PDF SSTA 4/3/2018 3:30:00 PM
HCR 10
HCR 10-Sponsor Statement-2018.pdf SSTA 4/3/2018 3:30:00 PM
HCR 10
HCR 10 Uniform Rule 20-2018.pdf SSTA 4/3/2018 3:30:00 PM
HCR 10
HCR 10 Fiscal Note.pdf SSTA 4/3/2018 3:30:00 PM
HCR 10
HB 20 Sponsor Statement.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Version O.PDF SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Summary of Changes.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Letters of Support - Various Emails.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Letter of Support - Martin Eldridge.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Letter of Support - Alaskans Together for Equality.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Letter of Support - Alaska Family Council.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Letter of Opposition - Alaska Family Action.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB 20 Fiscal Note.pdf SSTA 4/3/2018 3:30:00 PM
HB 20
HB152 ver N Sponsor Statement.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB 152 Version N.PDF SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB152 Memo of Changes 3.20.18.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB152 Additional Documents-DMVA Letter and bill info 3.19.18.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB152 Supporting Document-DMVA Letter and Sectional 3.19.18.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB152 Opposing Document-Letter Lawrence Wood 3.19.18.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
HB 152 Fiscal Note.pdf SSTA 4/3/2018 3:30:00 PM
SSTA 4/5/2018 3:30:00 PM
HB 152
SB 118 Opposition Letter Data and Marketing.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Testimony Digital Privacy Alliance.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
SB 118 Opposition Letter Data and Marketing.pdf SSTA 4/3/2018 3:30:00 PM
SB 118
HB 20 Letter of Support Alaska Family Action.pdf SSTA 4/3/2018 3:30:00 PM
HB 20