Alaska, one of the last holdouts, considers a statewide sales tax.
A House Bill in Alaska (H.B. 3006) would see the state impose a 2% state sales and use tax. Introduced in August 2021, the bill would also authorize the Department of Revenue (DOR) to enter into the Streamlined Sales and Use Tax Agreement.
Alaska would join 45 other states and the District of Columbia in a statewide sales tax. Increasing revenue in Alaska is part of the state’s efforts to balance the budget and encourage local purchasing. Groceries, wages, tips and other items are specifically exempt in the bill. Only 5 states do not have a sales tax – known as the NOMAD states – Alaska, Delaware, Montana, New Hampshire and Oregon. (However, localities in those states have had the right to implement a sales tax).
Local jurisdictions will be permitted to continue to levy a general sales tax on a purchaser for the sale and rental of tangible or intangible property and on services provided within the jurisdiction. However, these jurisdictions will be impacted by a statewide collection process. According to the bill:
“…a municipality that levies a general sales and use tax may collect the municipality’s general sales and use tax through December 31, 2022. The state shall assume responsibility for levying and collecting a municipal general sales and use tax 9 on July 1, 2022, unless requested to do so earlier by a municipality that has conformed 10 its tax base, including exemptions, definitions, and sourcing rules…”
Like the other 45 states, plus DC that levy a sales tax, Alaska is seeing the power of revenue generation from a sales tax system. Historically, Alaska has been able to fund governmental operations through pipeline activities, but with the change away from using oil and gas to environmentally friendly energy solutions and the power of the internet to transact business, Alaska has not reaped the benefits from a state wide sales tax. This new law could change that.