Alaska legislators have been cutting state expenses, but they have focused on little cuts that only deal with a few percent of our $4 billion deficit. At the same time, they have avoided a big cut that could make a real difference. Credits to the oil industry constitute the third largest item in the state budget. These credits, of nearly a $1 billion, exceed the total combined budgets of 13 state agencies.
Gov. Bill Walker's proposal to cut this huge expense is No. 1 of her three-part plan. Nos. 2 and 3 are to be done in combination with this cut: Use some earnings from the Permanent Fund for their intended purpose, and broad-based taxes, including reinstatement of the Alaska income tax.
Our income tax was the simplest of all the 50 states. It involved no complex forms to fill out. One simply used the computations done on the federal tax form and applied a simple percentage of it on a single page as the state tax. When we witlessly repealed our state tax, the rate was 14 percent of the federal tax. I suggest we start now with 10 percent.
Doubling the gasoline tax is an obvious step. It has not been adjusted in over 50 years in spite of inflation. It is the lowest in the nation, and if doubled it would still be 5 cents less than the national average.
A statewide sales tax is not to be considered. It is regressive by taxing low-income people at the same rate as those with higher income. It would also be complex to administer in Alaska's vast and varied area. And of course some local communities already have a sales tax. The concept of sales tax should be limited to local governments, not the state.
Finally, the budget problem is easier to solve now than it will be in the future.
Carl Benson is emeritus professor of geophysics at the Geophysical Institute at the University of Alaska Fairbanks. He lives in Fairbanks.
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