The Alaska Citizen's Guide to the Budget

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.

Estimated Revenues from 1% Statewide Sales Tax in 1998
(thousand $)
Tax Rate
Revenues per 1% Tax Rate
Total Revenues
Per Capita Revenues
Extrapolated from sales taxes in place in Alaska communities
Extrapolated from 1992 U.S. Dept. of Commerce Census
Overlay South Dakota state sales tax structure
Overlay Wyoming state sales tax structure
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.


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