Statewide Sales Tax

5.2.2 New Revenues to Fill the Fiscal Gap—Broad Based Sales Tax

The revenue that a sales tax could generate depends upon the size of the tax base, the categories of sales that are excluded, and the tax rate (including tax ceilings). A recent set of analyses estimated that a 1% sales tax would have generated between $70 and $116 million in 1998 depending upon what categories of sales were excluded.

Many local governments in Alaska already impose a sales tax ranging from 1% up to 6% (Kotzebue and Petersburg) and 7% (Wrangell). These estimates assume the statewide sales tax is added on top of any local taxes already imposed.

Tax Rate	Revenues per 1% Tax Rate	Total Revenues	Per Capita Revenues	Method
Estimated Revenues from 1% Statewide Sales Tax in 1998 (thousand $)
1%	$98,280	$98,280	$158	Extrapolated from sales taxes in place in Alaska communities
1%	$103,684	$103,684	$167	Extrapolated from 1992 U.S. Dept. of Commerce Census
4%	$95,387	$381,548	$621	Overlay South Dakota state sales tax structure
4%	$116,371	$465,482	$758	Overlay Wyoming state sales tax structure
5%	$70,369	$351,846	$573	Overlay North Dakota state sales tax structure
Source: Workshop on Tools for Fiscal Policy Analysts, UAA, Fall 1999.

Alaska Fiscal Policy Paper #6, "Who Will Pay for Balancing the State Budget?" (ISER), estimated in 1991 that a 6% sales tax with basics exempted would produce $216 million.

Other States. As of 1999, 45 states had a state sales tax. The median rate was 5% and ranged from a low of 3% in Colorado to a high of 7% in Rhode Island (Federation of Tax Administrators). The tax bite (as a percentage of personal income) among these 45 states varied in 1997 from a low of 1.20% in Virginia to a high of 4.78% in Hawaii.

States without a statewide sales tax in 1999 were Alaska, Delaware, Montana, New Hampshire, and Oregon.

See the detail by state.