Report: Alaska ranks last for sales and local tax collections

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(The Center Square) – Alaska collects the least amount of combined sales and local taxes, according to a report from the Tax Foundation.

The Last Frontier collected $4,192 per capita in fiscal year 2021, but the state is an anomaly, the nonpartisan organization said.

“While the state imposes incredibly low tax burdens on residents, its severance taxes generate substantial revenue that often yield relatively high collections per capita,” the report said. “FY 2021, however, captured a period of significant fluctuations in oil markets, from which the industry—and Alaska’s revenues—have since recovered.

Alaska does not have an income or sales tax, but local governments are allowed to collect sales taxes. Gov. Mike Dunleavy met with lawmakers about a bill that would have enacted a sales tax that would have covered a $600 million shortfall in the budget proposed by the House of Representatives.

The Legislature also discussed taxing S-corporations, which would have generated about $140 million. A second proposal would have changed oil companies’ deductions, bringing in about $300 million.

None of those measures passed, but lawmakers said the state needs to look at revenues beyond the state’s oil and gas funds.

State and local tax collections climbed more than 27% since fiscal year 2019, according to the Tax Foundation report.

“Much of that gain is subsumed by inflation, but even after adjusting for inflation, state and local tax revenues are more than 7 percent higher than they were pre-pandemic,” the report said.

According to the report, the District of Columbia collected the most state and local taxes at $13,278 per capita. New York was second at $10,266, followed by California at $9,175.

Alabama had the second lowest amount at $4,192 per capita, followed by Tennessee at $4,272.

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