House votes to eliminate tax filing discounts worth $500,000 annually

The Alaska House of Representatives voted Wednesday to eliminate four tax deductions and discounts worth approximately $500,000 annually, including a cigarette stamp discount that has continued for more than two decades after the equipment it subsidized was paid off.

Senate Bill 164 passed 25-14 in the House.

The bill eliminates the motor fuel tax timely filing credit instituted in 1997, the tobacco products tax timely filing deduction from 1997, the cigarette stamp tax discount from 2003, and the tire fee timely filing discount. All four were created to encourage timely tax payments when new tax structures were implemented.

Representative Sara Hannan said the cigarette stamp discount was created in 2003 when a new stamp required merchants to purchase a $75,000 machine. The state offered a $50,000 discount to offset the cost. Hannan said the discount remained on the books long after merchants had paid off the equipment.

Eight companies currently benefit from the discount, each receiving roughly $40,000 a year in cigarette stamp tax reductions, Hannan said.

The bill originated from the Indirect Expenditure Report, in which Legislative Finance reviewed 136 programs and recommended 45 for cleanup. Senate Bill 164 addresses four of those recommendations.

Most of the affected taxes are now paid digitally rather than on paper, Hannan said. She said the bill levels the playing field because not all taxpayers can take advantage of the discounts.