Not surprisingly in a state that hasn’t raised its motor fuel tax rate in 50 years, the Alaska Legislature this session failed to approve a measure to raise the rate, nor did it pass legislation to tax e-cigarettes the same as tobacco products or reinstate the so-called education “head tax” that lawmakers abolished more than 40 years ago.
Bills to adopt a state income tax and raise oil taxes made little progress this year, despite the fact that Alaska has drained its savings over the years to cover spending.
Legislation that failed to win House and Senate approval in the first year of Alaska’s two-year legislative term is alive for further consideration next year.
Though lawmakers are meeting this month in special session, they may only consider measures put on the agenda by the governor when he called the special session. That is limited to the budget and the size of the Permanent Fund dividend.
The motor fuel tax bill made it as far as the House Finance Committee, where work could resume next year. It would raise the state tax rate — the lowest in the nation — from 8 cents to 16 cents a gallon, which would still be far short of the national average.
A similar bill passed the Senate last year but died in the House as members hurried to adjourn the session as the COVID-19 pandemic accelerated. The tax increase would raise more than $30 million a year that could go toward highway maintenance.
Also falling victim to last year’s rushed adjournment was legislation to tax for the first time electronic smoking products — e-cigarettes and vaping devices — the same as tobacco products. This year’s efforts to impose the tax made it to the Finance Committees in both the House and Senate, where they will age for another year.
Supporters said the e-cigarette tax would help to steer younger people away from e-cigarettes and vape products.
It’s not unusual for legislators to pass bills in preliminary committees, only to see them languish in the Finance Committee, which has to make the harder political fiscal decisions.
Also sitting in House Finance is a bill that would bring back the state’s per-person tax, intended to raise money for public schools. Rich with oil dollars in 1980, the Alaska Legislature abolished the state’s annual $10-per-person tax that went to help support schools — known as the education head tax.
The proposal this year to restore the tax at a higher rate based on a person’s income would bring in an estimated $65 million a year. The tax on wage earners and self-employed people, residents and non-resident workers alike, would range from $50 to $500 per person per year, depending on their income.
None of the other tax legislation this session that would impose a personal income, raise oil production taxes or corporate income taxes even made it as far as the Finance Committee in either chamber.
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