This week the Senate Resources Committee is reviewing efforts to streamline and better understand Alaska’s tax systems.

Our state’s tax systems are complex.  In addition to oil and gas taxes which provide the vast majority of state income, there are numerous other revenue programs that the state government administers.  The Alaska Department of Revenue (DOR) administers 22 tax programs using 17 different tax management systems. These programs range from corporate income taxes to levies on alcoholic beverages, car rentals, and fish processing, collectively accounting for nearly $5 billion in state revenue.  It’s crucial that state government be able to collect and account for these public funds, and the Senate has taken the lead in making sure our state’s finance systems are responsive.

Recently the Legislature received a report it funded stating that Alaska’s tax systems have a lot of room for improvement.  The report clearly documents that the tax systems being used by the state consist of multiple databases stretched beyond their intended use.  The arrangement is highly inefficient, burdensome for taxpayers, and inhibits the timely collection of necessary tax data.

To address this problem the Legislature appropriated $34.7 million last year to implement an integrated tax management system.  This funding will help to replace the over one dozen separate and largely incompatible state tax systems with one comprehensive and unified system.  This week, DOR Commissioner Brian Butcher presented the Department’s progress advancing the project to the Senate Resources Committee.

Although updating the state’s antiquated tax systems will be a multi-year process, it is encouraging to know that the Legislature and the administration are in alignment, and that we have a plan and adequate funding to streamline Alaska’s tax systems.

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