"An Act relating to a borough sales tax exemption for a source that is taxed by a city in that borough. "

Article X, Section 1 of the Alaska State Constitution states that the intent of that section is to "provide for maximum local self-government with a minimum of local government units, and to prevent duplication of tax-levying jurisdictions."

House Bill 293 clarifies current statutory language to make it plain that a borough government may institute local tax exemptions and avoid the "stacking of taxes." Without this provision, cities within borough boundaries who chose to tax themselves may be subjected to "double taxation" should the borough decide to levy a borough wide tax. Under these circumstances, taxable entities may end up paying an 8% tax to the city and an additional 8% tax to the borough. This kind of double taxation severely affects the costs of doing business in those areas and goes against the public policy of Alaska.

It is within the purview of the borough assembly to choose to exempt certain areas from a borough wide tax in order to avoid double taxation. House Bill 293 clears up any remaining questions that may be left regarding the taxation exemption powers of borough governments. I strongly urge your support of this important piece of legislation.

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