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
Method
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.

 

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