Reject Governor's Call for Tax Hikes
December 20, 2003
"Even as the shortest day of the year approaches, there may be much darker days ahead for Alaskans unless Governor Murkowski's tax hikes are defeated," according to NTU President John Berthoud.
The centerpiece of Murkowski's proposal is a big hike in taxes on all types of tobacco (cigarettes, cigars, and smokeless products). Berthoud noted that "this means bad news for low-income Alaskans. Taxes on cigarettes and smokeless tobacco have a very regressive impact." According to Congress's Joint Committee on Taxation, more than 2/3 of all federal tobacco taxes come from those earning less than $40,000 per year (a pattern that also applies to state-level tobacco taxes).
Murkowski has also proposed raising taxes on tourists by hiking state levies on hotel guests and cruise ship passengers. Berthoud observed, "Through these proposals, Governor Murkowski is hanging out a sign that says, 'Tourists are not welcome in Alaska.' Particularly with the information now available on the Internet, travelers are becoming more cost-conscious. High tourism taxes are increasingly a determinant in destination decisions."
As an alternative to the tax increases, NTU urged Gov. Murkowski and the Alaska Legislature to look for spending restraint before eyeing taxpayers' wallets. Earlier this year, for example, NTU endorsed a Constitutional Amendment proposed by Rep. Bill Stolze that would cap certain categories of state spending unless 3/4 of the Legislature votes to override.
According to NTU, such expenditure or tax limitations, incorporating legislative "supermajority" or voter approval safeguards, are actually not uncommon. More than a dozen states feature these mechanisms, and the gloom-and-doom predictions from the political establishment over their enactment have not proven accurate. In fact, since 1992 Colorado has had a strict voter approval requirement for tax and spending increases above the rate of inflation and population growth; in Fiscal Year 2002, during the height of state fiscal problems, Colorado was one of just five states not to have a budget shortfall.
"Raising taxes is never
a substitute for budget discipline," Berthoud concluded.
"Sensible Alaskans know that once politicians get away with
targeted tax hikes, other increases will follow, and sooner or
later everyone will have a bullseye painted on their back."
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