Every year, the state of Alaska forgoes roughly a billion dollars because of tax credits, subsidies, and fee exemptions. With the state facing a multi-billion dollar deficit, the Legislature is taking a closer look at these potential revenue sources.
A report by the Department of Revenue identified more than $40 million indirect expenditures for reconsideration, and another $446,000 for outright termination. Among the potential cuts are a discount to cigarette companies for putting stamps on their packaging that verify they have paid taxes, and a corporate income tax loophole that could encourage taxpayers to move assets to foreign subsidiaries.
At a House Finance committee hearing on Tuesday, Fairbanks Republican Steve Thompson described the report as a guide for legislators working to trim the state’s budget.
“This is going to be a valuable, valuable book to make people go back and take a look to see what kind of legislation we need to pass and what we need to repeal,” said Thompson.
Legislative and agency staff were careful to note that the value of a tax credit or subsidy may not be recovered in full if the measures are removed from the books.
While a bill to repeal some of these credits and subsidies has not yet been introduced, legislators are considering the possibility of an omnibus bill that could remove multiple items at once.
The report is the first assessment of the money the state forgoes from credits and subsidies. The reporting process was created last year as part of a bill establishing automatic sunsets for indirect expenditures.