Former Gov. Frank Murkowski speaks on a range of subjects during an interview with the Juneau Empire in May 2019. (Michael Penn / Juneau Empire File)

Opinion: Sales tax proposal defies logic

Nor does it even make horse sense.

  • By Frank Murkowski
  • Tuesday, May 9, 2023 7:16pm
  • Opinion

The proposal presented by our governor and some in the Legislature leveling a statewide sales tax on all Alaskans defies logic. Nor does it even make horse sense.

The governor appears to support a $2,700 Permanent Fund dividend. Some in the Senate propose a $1,300 dividend. If the $2,700 dividend were to be approved by the Legislature it would create a $600 million deficit. That is about what the governor would need to come from his sales tax proposal to fund his higher dividend. So, the sales tax proposal funds the difference, and it comes from the pocket of every Alaskan on virtually every purchase he or she might make.

Some suggest that this increased sales tax funds a bigger dividend. Yet it’s collected over the course of a year from each and every Alaskan. And the PFD is taxed as income. So, is it really free money? Clearly most Alaskans understand and oppose the tax because we would get a much bigger bang for the buck by investing in Alaska’s future through increased funding for education.

Further the application of sales tax traditionally belongs exclusively to municipal governments. The tax rate usually ranges from 2-8%.

It’s been pointed out that if the federal government can carry a deficit, why can’t the state? First, unlike the federal Constitution the state Constitution requires a balanced budget. Second, the federal government can print money. And that causes inflation that we now know too well.

The Permanent Fund was designed to be the principal state savings account and source of income to run state government operations. Non-recurring revenue from oil taxes should be used to meet the state’s obligation to grow the Permanent Fund for the future needs of Alaskans.

Money for the dividend was meant to be sized after state government services obligations had been met. That remains the case — only a portion of the Fund’s earnings should be allocated to the dividend after State services are funded.

Further, to withhold school funding and to add a state sales tax to fund the shortfall caused by an overly generous dividend is certainly contrary to the intent of those who drafted the Permanent Fund’s enabling legislation. It is fair to say that our late Gov. Jay Hammond would say simply ‘it just doesn’t make horse sense.”

Frank Murkowski is a former U.S. Senator and was the eighth governor of Alaska. Columns, My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire. Have something to say? Here’s how to submit a My Turn or letter.

More in Opinion

Web
Have something to say?

Here’s how to add your voice to the conversation.

Letter: LGBTQ+ flag at federal building was proper

LGBTQ+ flag at federal building was proper In response to Tom Dawson’s… Continue reading

Opinion: Empire disrespects the flag

Empire disrespects the flag Shame on you. I am extremely disappointed in… Continue reading

Opinion: Time to prevent the circular firing squad

Time to prevent the circular firing squad I’m developing an almost vitriolic… Continue reading

Rebuttal: Ignell ignorant about realities of Juneau’s housing market

Rebuttal: Ignell ignorant about realities of Juneau’s housing market In the few… Continue reading

Opinion: Telephone Hill homes worth preserving

Telephone Hill homes worth preserving Juneau’s history is preserved and told in… Continue reading

Opinion: Questionable property assessments by CBJ deserve a grand jury investigation

Imagine if the price of unleaded gasoline increased 20% tomorrow to $4.80… Continue reading

(Peter Segall / Juneau Empire File)
Opinion: Sustainability report is a greenwashing effort

Report leaves out “the not-so-pretty.”

(Peter Segall / Juneau Empire File)
Opinion: Considering North Douglas crossing alternatives

This new highway project will be scrutinized differently than others during the past 30 years.

Most Read