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Proposed borough fuel transfer tax sparks opposition Air carriers threaten suit if fuel transfer tax approved by Fairbanks North Star Borough voters; most of tax would be on jet fuel, say proponents by The Associated Press
Che Alaska Air Carriers Association said it will sue the Fairbanks North Star Borough if voters approve a 2-cent-per-gallon fuel transfer tax.
Williams Alaska Petroleum Inc., the Alaska Air Carriers Association and the Alaska Railroad Corp. said state and federal laws prohibit the tax.
Most of the money from the proposed tax likely would come from jet fuel Williams Alaska sells to Anchorage from its North Pole refinery, said Merrick Peirce, spokesman for A Bright Future for Fairbanks, the group pushing the proposed fuel tax.
The tax would bring in $24 million — enough to reduce property taxes by 40 percent throughout the borough. Property taxes have doubled during the last 15 years. Peirce said.
Jeff Cook, vice president of external affairs for Williams Alaska, said Williams \pays the third-largest amount of property tax in the borough, about $3 million annually. Although it would save about $1 million a year in property taxes if the fuel transfer tax is approved by voters, Williams would suffer severe financial losses from its jet fuel sales, Cook said.
Jet fuel shipments would be hit Williams provides about half of the jet fuel for the Ted Stevens Anchorage International Airport. Cook said if his company were hit with the tax, it would lose its customers to Tesoro Alaska Petroleum Inc. or to Outside producers.
Petroleum makes up most of the freight revenue for the Alaska Railroad, projected at $36 million for 2002. If Cook is right, the railroad would suffer huge losses, said Patrick Flynn, Alaska railroad spokesman. He said the railroad believes the tax is not allowed under federal law. The proposed tax, Flynn said, would “discriminate against rail transport and exempt pipeline fuel.”
David Leone, a special assistant for Mayor Rhonda Boyles, said neither the borough nor the Fairbanks City Council have taken a position on the proposed tax.
The borough has hired Av Gross, a former state attorney general, to give a legal opinion on the borough’s power to tax fuel transfers.
State law prohibits taxation of fuel used for heating and power generation or fuel used in airplanes that operate flights to foreign countries. Cook said most of the jet fuel Williams produces is used for foreign flights.
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