Legislature(1995 - 1996)

02/01/1996 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HB 431 - INCREASE TOBACCO TAXES                                             
                                                                               
 Number 070                                                                    
                                                                               
 CO-CHAIR TOOHEY stated Co-chair Bunde was the sponsor of HB 431 and           
 asked him to present the sponsor statement.                                   
                                                                               
 Number 088                                                                    
                                                                               
 CO-CHAIR BUNDE clarified this is a HESS Committee bill, offered by            
 the HESS Committee, at Co-Chair Bunde's request.  While it is a               
 committee bill, it is a personal committee bill for Co-Chair Bunde.           
 He explained that cigarettes killed his mother, or as some would              
 say, she used cigarettes to kill herself.  In the era when his                
 mother began smoking, it was considered sophisticated and the                 
 positive thing to do.                                                         
                                                                               
 Number 152                                                                    
                                                                               
 CO-CHAIR BUNDE said he was very concerned that the media blitz from           
 the tobacco industry is expanding in such a way that young people             
 in our society will fall into the same trap his mother fell into;             
 that it's the sophisticated, accepted thing to do.  Because of his            
 concern, Co-Chair Bunde said he was offering this legislation                 
 relating to taxes on tobacco products, which he looks at as an                
 economic barrier more than anything else.  He addressed the issue             
 of taxes versus user fees.  Without playing semantic games, he                
 thinks taxes are what each of us pay whether we use the service or            
 not.  User fees, in this case, involve only those who smoke.                  
                                                                               
 CO-CHAIR BUNDE read a portion of his sponsor statement for the                
 record:                                                                       
                                                                               
      There is an epidemic in our state that is killing more                   
      Alaskans each year than motor vehicle accidents, firearms,               
      drugs and alcohol combined.  That, of course, is tobacco.                
      This is an epidemic that usually starts in childhood and                 
      is preventable.                                                          
                                                                               
      Alaska has one of the highest smoking rates in the United                
      States.  Nearly 84 percent of Alaskan adults started smoking             
      between the ages of 10 and 20 years of age.                              
                                                                               
      Obviously adults don't start smoking, children do.  The                  
      average age for a youngster starting smoking is 14.5 years.              
      Annually, 3,000 children in the United States start smoking              
      every day.  Of those, approximately one-third will die from              
      from tobacco related illnesses.  HB 431 is about prevention,             
      it's about an economic barrier because the youth in our                  
      state are so price sensitive.  They have a limited                       
      discretionary income.  The passage of this legislation will              
      drastically decrease the use of tobacco in the young.  As the            
      price of cigarette and tobacco products increase, many young             
      smokers won't start smoking and others who already smoke will            
      be encouraged to quit.  As a matter of fact, I've talked with            
      adults who have told me that a price increase will push them             
      over the edge and encourage them to quit.                                
                                                                               
      In Alaska, the estimated total medical costs directly related            
      to smoking in 1993 alone was $96,490,000.  It makes sense to             
      prevent future escalation of our health care costs by creating           
      economic incentives for children and adults to quit using                
      tobacco products.  House Bill 431 will decrease the use of               
      tobacco and help decrease further increases in our health care           
      costs.                                                                   
                                                                               
      Again, let me stress HB 431 is a user fee.  The price increase           
      caused by this fee will work in favor of Alaskans.  Studies              
      show that for every 10 percent increase in price in tobacco              
      products, there has been a 4 percent decrease in tobacco                 
      consumption.  An even greater decrease among children.                   
      Alaska's current cigarette tax is 29 cents a pack.  That ranks           
      us twenty-sixth in the nation.  I urge the committee to                  
      support HB 431 for the future health of our youth and our                
      adults.                                                                  
                                                                               
 Number 416                                                                    
                                                                               
 CO-CHAIR BUNDE commented there were a number of people signed up to           
 testify and wanted to briefly introduce those individuals who would           
 be testifying:  Commissioner Karen Perdue, Department of Health &             
 Social Services; Pat Carr, program manager, Department of Health &            
 Social Services; former Senator Arliss Sturgulewski; David Sweanor,           
 nationally recognized worker in the Non-Smokers' Rights                       
 Association;  Dr. Farley, physician with Valley Medical Care;                 
 representatives from the Department of Revenue; several individuals           
 testifying via teleconference; and Ruth Parriott, American Cancer             
 Society.                                                                      
                                                                               
 REPRESENTATIVE GARY DAVIS arrived at 3:10 p.m.                                
                                                                               
 Number 492                                                                    
                                                                               
 CO-CHAIR TOOHEY asked if there were any comments or questions from            
 the committee.  Hearing none, the meeting was opened for public               
 testimony.  Co-Chair Toohey called Commissioner Perdue forward to             
 testify.                                                                      
                                                                               
 Number 515                                                                    
                                                                               
 KAREN PERDUE, Commissioner, Department of Health & Social Services,           
 said on behalf of the Knowles Administration, she applauded the               
 leadership of the HESS Committee for introducing HB 431 and fully             
 supports the legislation.  As the health agency, the department is            
 especially interested in the public health aspects of the                     
 prevention approach.  She refrained from citing statistics, but               
 offered a few key points:  Tobacco is the leading cause of death              
 for Alaskans; there are more kids starting to smoke than ever                 
 before; smoking costs not only lives, but lots of money; and this             
 tax is supported by the public.  She commented that Alaskans will             
 probably be hearing evidence not regarding the issue of the health            
 effect, but how taxes relate to solving the problem.  She concluded           
 that because we are aware of the devastating effects of tobacco use           
 and know it is the leading cause of death in Alaska, we all should            
 be willing to do everything we can, even if the evidence isn't                
 entirely conclusive, to prevent this disease from continuing to               
 kill people.  She concluded by saying anything we can do to prevent           
 the youth from starting to smoke and prevent adults from continuing           
 to smoke is a very worthwhile effort.                                         
                                                                               
 REPRESENTATIVE CAREN ROBINSON said there is not a lot of assistance           
 available to help treat people who are trying to stop smoking.  She           
 asked Commissioner Perdue if there had been any discussion in the             
 department about what avenues should be taken to not only target              
 the youth who are smoking, but also help them get the information             
 and treatment they need to stop.                                              
                                                                               
 Number 680                                                                    
                                                                               
 PAT CARR, Health Program Manager, Division of Public Health,                  
 Department of Health & Social Services, stated she supported the              
 comments made by Co-Chair Bunde in terms of the significance of the           
 health problem and the cost of using tobacco.  In response to                 
 Representative Robinson's question, she said the leading voluntary            
 health organizations, particularly the American Cancer Society and            
 American Lung Association, have been very active in the area of               
 sponsoring programs for tobacco cessation.  Some of the efforts               
 that have also been considered are programs started within the                
 schools to work with young people.  These programs however, are not           
 widespread.  There aren't any national programs that have looked at           
 nicotine addiction among children as young as Alaska is working               
 with.  In some communities work is being done with children in the            
 second through sixth grades, where regular users are as high as 5             
 percent.                                                                      
                                                                               
 Number 750                                                                    
                                                                               
 MS. CARR addressed some of the variations between the urban areas             
 and the rural areas of the state.  In some of the rural areas, one-           
 third of the population are regular users of tobacco and sometimes            
 it is higher.  In urban areas, there's a 25 percent rate.                     
 Statistics show a lower rate among individuals who are more                   
 educated.  There are some variations to work with since not all               
 communities are the same.  On the national level, there are a                 
 variety of strategies to reduce tobacco use that have been shown to           
 have some efficacy.  She pointed out that education alone is not              
 changing the behavior among the population.  A couple of the issues           
 looked at were how do children get access to tobacco products and             
 the advertising and promotion, but the one strategy that seemed to            
 have the greatest effect was increasing prices of tobacco which               
 results in children having less access to tobacco.                            
                                                                               
 Number 825                                                                    
                                                                               
 MS. CARR commented on things happening in Alaska in terms of                  
 organizations such as the American Heart Association, American                
 Cancer Society, medical associations and public health associations           
 working together.  Another strong organization is the Alaska                  
 Tobacco Control Alliance, which is made up of over 200 people in              
 rural and urban areas of the state.  These organizations are able             
 to offer some strategies to individuals calling to find out what              
 can be done in their community.   Ms. Carr concluded that as                  
 leaders who care about the health of all Alaskans and the cost of             
 the health care system, the strategies that we can try through                
 increasing the price of tobacco is a worthwhile endeavor.                     
                                                                               
 Number 885                                                                    
                                                                               
 CO-CHAIR BUNDE commented an area that hasn't been talked about yet            
 is smokeless tobacco.  He asked Ms. Carr if the horrible stories              
 were correct about children in the rural areas as young as 4 and 5            
 years old beginning to chew tobacco.                                          
                                                                               
 MS. CARR answered yes, those were the kind of anecdotal reports the           
 department has gotten.                                                        
                                                                               
 Number 908                                                                    
                                                                               
 ARLISS STURGULEWSKI, Volunteer, Citizens to Protect Kids From                 
 Tobacco, said she was appreciative that the committee was                     
 considering legislation that was going from the treatment to the              
 prevention side.  She is enthusiastically in support of the                   
 legislation; primarily from a public policy point of view.  Adults            
 don't start smoking, it's kids that do.  Eighty-nine percent of               
 adults that smoke began using cigarettes by or at the age of 18.              
 She believes there is really something wrong in a society where as            
 many children recognize Joe Camel as recognize Mickey Mouse.  One             
 percent of teen-age smokers were smoking in 1988 when Joe Camel was           
 introduced; now Camels is selling 30 percent to that particular age           
 group.   That's proof that advertising does pay.  She feels the               
 single most effective way to reduce tobacco consumption amongst               
 children is by the "price sensitive" issue that will result with an           
 increase.                                                                     
                                                                               
 Number 1033                                                                   
                                                                               
 MS. STURGULEWSKI shared a personal story that has helped shape her            
 view on tobacco consumption.  She and her two sisters-in-law were             
 in their late teens when World War II ended.  They were all college           
 bound, thrilled with their new freedoms, and by the choices for               
 their futures.  They all started to smoke and were soon very truly            
 and very completely hooked on tobacco.  Ms. Sturgulewski smoked 2             
 l/2 packs a day when she was pregnant with her son.  Her doctor was           
 a smoker and didn't warn her about the potential problems of                  
 pregnant women smoking.  Her son was small at birth and was born              
 with lots of respiratory problems.  She quit smoking only because             
 she got very ill with pneumonia.  Her sisters-in-law were not quite           
 so lucky.  They tried prayer, acupuncture, patches, clinics, etc.             
 to help them in their attempts to quit smoking.  Nothing worked.              
 One sister-in-law was buried this year; the other is being taught             
 at a clinic how to breathe with what is left of her lung capacity.            
                                                                               
 Number 1110                                                                   
                                                                               
 MS. STURGULEWSKI commented that tobacco taxation is often referred            
 to as a "sin tax."  She doesn't think of it that way, but instead             
 thinks of it as a health tax.  She said that Co-Chair Bunde had               
 referred to it as a user fee, but it does filter down to the public           
 through the associated costs.  She pointed out that committee                 
 members, as elected officials, are paying for her insurance, their            
 own insurance, public state employee's insurance; many of whom have           
 tobacco related problems.  It is a hidden cost to many taxpayers,             
 including the general public.                                                 
                                                                               
 Number 1150                                                                   
                                                                               
 MS. STURGULEWSKI concluded that passage of this legislation is                
 solidly supported by the public.  It is very popular with the                 
 public, it cuts across a very broad spectrum of the population.               
 She urged the committee to pass HB 431.                                       
                                                                               
 Number 1210                                                                   
                                                                               
 DAVID SWEANOR, testified via teleconference from Ottawa, Canada.              
 He spoke about the history of taxation in the United States and the           
 evidence of the impact of tax changes, particularly in Canada.  Mr.           
 Sweanor has done a lot of work on tobacco tax policy in many                  
 countries around the world, particularly the United States and                
 Canada.  He finds it interesting that tobacco taxes in the United             
 States are very low compared to other countries.  The tax on a pack           
 of cigarettes in British Columbia is $2.70 U.S.  Many European                
 countries are much higher.  Not only does the United States have              
 low levels of tobacco taxes, they've been falling when adjusted for           
 inflation.  Mr. Sweanor referenced graphs that were before                    
 committee members, and said the first graph shows the price of                
 cigarettes without adjustment for inflation.  The second graph                
 depicts the price adjusted for inflation.  When inflation is taken            
 into account, taxes are actually lower now than what they were                
 before we knew of the health consequences.  Prior to the 1964                 
 report of the U.S. Surgeon General, which was a landmark worldwide,           
 Alaska's taxes were 8 cents a pack, as was the federal tax.  When             
 that is adjusted for inflation, the tax per pack now would be 80              
 cents, when in reality the tax has fallen to 53 cents.  That's                
 because the tax hasn't kept up with inflation.  As can be seen in             
 Graph 2, taxes have fallen behind and are doing so at precisely the           
 time that scientifically we came to understand what the health                
 problems were.  Alaska has fallen behind more so than the other               
 states.  At the time of the Surgeon General's report, Alaska's tax            
 was the highest in the United States; it is now firmly in the                 
 bottom half of taxes in the United States.  The importance of that            
 is depicted in Graph 3, which shows what has happened to the price            
 and the consumption in the United States over the last 40 years.              
 This clearly shows when the price goes up, consumption goes down.             
 If the price goes down, the consumption goes up.  It is very much             
 a cause and effect relationship.  That is consistent with all the             
 academic evidence seen in other jurisdictions.  Mr. Sweanor                   
 commented that a little over ten years ago when they started                  
 working on increasing the tobacco taxes in Canada, all their work             
 was based on research done by economists in the United States which           
 indicated there is a range of factors that affect consumption, but            
 price is probably the most significant; certainly the most                    
 significant of anything that is within the realm of being doable.             
 Various studies from the United States indicated the most powerful            
 thing they could do was to increase the price.  He said that made             
 sense because we know that everything has some relationship when              
 looking at price and consumption.  Kids don't have a lot of money,            
 they are not yet addicted to the product, they can change their               
 behavior so if the price goes up, they may have to decide between             
 buying a new baseball or buying a pack of cigarettes.  Kids have              
 unlimited needs, but a limited ability to buy things.                         
                                                                               
 Number 1438                                                                   
                                                                               
 MR. SWEANOR said Graph 4 illustrates what happened in Canada; as              
 the price went up from the U.S. price level similar to the European           
 level, teen tobacco consumption plummeted.  At the beginning of the           
 1980s, over 40 percent of 15- to 19-year-olds in Canada were                  
 smoking every day.  It was a huge problem.  By the beginning of the           
 1990s, that had fallen to about 16 percent.  Teen tobacco                     
 consumption fell about 60 percent and adult consumption fell about            
 40 percent.  That's 40 percent even after taking into account the             
 tobacco that was coming across the border from the United States,             
 which was a problem in areas like Ontario and Quebec.                         
                                                                               
 MR. SWEANOR directed committee members to Graph 5 which illustrates           
 what the impact was on government revenue.  As tobacco sales fell             
 in association with the big increase in price, total Canadian sales           
 fell from over 70 billion cigarettes a year down to about 40                  
 billion cigarettes a year:  a very significant decline in a fairly            
 short period of time.  Revenue, however, went from about $2 billion           
 a year to over $7 billion a year, simply because of the                       
 relationship between price and consumption.  The governments are              
 doing much better in making significantly more money while selling            
 significantly fewer packs of cigarettes.                                      
                                                                               
 Number 1505                                                                   
                                                                               
 MR. SWEANOR stated the real test of the relationship between price            
 and demand has been shown recently in Canada, (indisc.) as a result           
 of smuggling in Eastern Canada.  He noted the smuggling that went             
 on was not U.S. cigarettes coming across the border in large                  
 numbers as the tobacco companies told us would happen for a long              
 time.  When it didn't, the Canadian companies simply took to                  
 shifting billions of cigarettes into upstate New York, which is one           
 of the border crossing population centers in that part of the                 
 country.  As a result of the pressure caused by smuggling, the                
 government rolled back taxes in parts of the country.  As a result,           
 a big increase in smoking is being seen, particularly among young             
 people.  According to a major report from an Ontario government               
 agency that came out a couple of months ago, virtually all the                
 progress that was made in the last few years has been lost.  For              
 example, among male students the smoking rate has increased from              
 about 22 percent in 1993 to over 28 percent in 1995.  Other                   
 population groups, particularly young people have been that much or           
 more pronounced.  Again, it is the cause and effect relationship.             
 It wasn't a mere coincidence that smoking among young people in               
 Canada fell; it did exactly what the academic studies from the                
 United States indicated it would do.  It responded to                         
 affordability.  As cigarettes become more affordable, the                     
 consumption of cigarettes has gone up.                                        
                                                                               
 Number 1586                                                                   
                                                                               
 In conclusion, MR. SWEANOR said the tobacco industry is now saying            
 that price doesn't affect consumption and that tax increases do not           
 work, so do not increase taxes.  He thinks that has about as much             
 credibility as everything else the tobacco industry tells us.  He             
 commented it's odd that here's an industry that on the one hand is            
 telling people in Washington that smoking isn't addictive, but on             
 the other hand, it's going to Alaska with the message that no                 
 matter what you do, you can't get people to quit.  He reiterated              
 the economic research is so overwhelming.  Virtually every group              
 that has a big interest in protecting kids, looks at the evidence             
 and says this has a tremendous impact.  The only people he is aware           
 of who are claiming that it has no association with consumption is            
 the tobacco industry.  They used to claim just the opposite until             
 it clearly became in their interest to try to prevent these certain           
 things from happening.  When the tobacco industry says don't                  
 increase tobacco taxes, we must take into account where else will             
 that money come from.  In effect, over the last 30 years the fact             
 that tobacco taxes have been able to fall in real terms means that            
 revenue had to come from somewhere else, whether it was from fees             
 charged for government services, higher property taxes, taxes on              
 investment, taxes on income, or taxes on something else.  When                
 looking at all the various ways that governments can generate                 
 revenue, virtually all of them impact on some sort of behavior that           
 we generally would like to encourage rather than discourage.  In              
 the case of tobacco, there is a very strong case for saying we want           
 to discourage the use of tobacco and prevent our children from                
 starting to use a product that medical science now tells us will              
 result in the deaths of half of all the long-term users.  The tax             
 increase is something that works.  With respect to smuggling,                 
 there's been virtually no smuggling when anti-smuggling measures              
 are taken.  He thought a lot of the information from the tobacco              
 industry on the smuggling issue is at the very least, highly                  
 suspect and it certainly does not apply to Alaska.                            
                                                                               
 Number 1705                                                                   
                                                                               
 CO-CHAIR TOOHEY asked Mr. Sweanor if the higher taxes in Canada               
 were dedicated to health-related issues, tobacco education or did             
 the revenues go into the general fund, like Alaska's will do.                 
                                                                               
 MR. SWEANOR responded in Canada it went into the general fund,                
 although it was associated with other money that went into various            
 areas of health.  For example, now there is an extra tax put on               
 tobacco companies, as a way of punishing them for their role in the           
 smuggling situation, that is directed specifically into tobacco               
 control activities.                                                           
                                                                               
 CO-CHAIR BUNDE clarified that a portion of Alaska's cigarette                 
 taxes, dating back to Territorial days, goes into the educational             
 fund and the rest goes into the general fund.                                 
                                                                               
 Number 1760                                                                   
                                                                               
 REPRESENTATIVE NORMAN ROKEBERG referred to the comment made by Mr.            
 Sweanor that he didn't think there would be any cross border                  
 smuggling problems between the Yukon Territory in British Columbia            
 and the state of Alaska.  Representative Rokeberg asked if that was           
 because the price schedule in this legislation would be similar to            
 or very close to the retail prices in the Yukon Territory.                    
                                                                               
 MR. SWEANOR answered that the taxes in British Columbia amount to             
 $2.70 U.S. per pack.  Even with the proposed increases of $1.00 per           
 pack plus adding in the federal tax, Alaska's tax will be more than           
 $1.00 a pack cheaper than British Columbia.                                   
                                                                               
 Number 1817                                                                   
                                                                               
 ELLEN FARLEY, Physician, Valley Medical Care, testified she is a              
 board-certified family physician who has lived and practiced here             
 in Juneau for 7 l/2 years.  Prior to that, she practiced in a                 
 variety of settings including training, Indian Health Service,                
 teaching in a residency and others.  Everywhere she goes, tobacco             
 related illness is a very painful issue for people and their                  
 doctors.  She is testifying before the committee as an individual             
 and as a volunteer with the Alaska Chapter of the American Cancer             
 Society.  She is also a member of the American Academy of Family              
 Physicians (AAFP), which is a national organization for education             
 and health policy.  She said the AAFP is very enthusiastically                
 behind this kind of measure.  The family practice report this month           
 proclaimed their public health initiatives -- AAFP fights tobacco.            
 She believes that all across the country, family practice doctors             
 are feeling an increased urgency about this issue and about the               
 need to take steps to prevent new smokers.                                    
                                                                               
 Number 1910                                                                   
                                                                               
 DR. FARLEY commented as a family doctor, she gets to see up close             
 and personal, how tobacco use can ravage a person's health and the            
 tragic losses it brings to families.  The frustration is that it              
 was preventable, it didn't need to be like that.  It has been well            
 established that smoking and tobacco use has major negative impacts           
 on the health of most users and creates enormous costs to society.            
 Tobacco is extremely addictive and the addiction will occur within            
 a very short time of regular use.  Once a person is addicted, it is           
 very difficult to quit.  She took issue with a recent article in              
 the Juneau Empire from an individual who said that most smokers             
 don't start as teens; they experiment a little bit, but start later           
 as an informed choice by responsible adults.  She stated that is              
 not true.                                                                     
                                                                               
 Number 1976                                                                   
                                                                               
 DR. FARLEY said that in her work with teens, they often tell her              
 they thought they were experimenting.  They despise smoking, but              
 they were rebellious, curious and very susceptible to the messages            
 in the advertising.  They started experimenting, but found they               
 were hooked very quickly.  She commented that in her work she sees            
 smokers as individuals who are suffering.  They have poorer health,           
 are less productive and have a poorer quality of life in old age.             
 Her personal belief is that smokers suffer a kind of insidious                
 erosion of self-esteem, similar to what is seen with other kinds of           
 addictions.  Most smokers want to quit.  In her practice, she makes           
 every effort to work at smoking cessation counseling.  She does a             
 lot of counseling particularly in January and February because of             
 New Year's resolutions and she is always ready to help people.  It            
 turns out to be frustrating for both her and the smoker because it            
 is so difficult to quit.  It all comes back to prevention and how             
 much sense it makes to try to prevent people from becoming smokers.           
                                                                               
 DR. FARLEY pointed out that research has shown there are multiple             
 contributing factors in the establishment of a new smoker.  It                
 takes multiple and usually combined approaches to help people quit            
 smoking and to prevent people from starting to smoke.  Education is           
 a factor, restricting access especially by minors is a factor,                
 eliminating advertising directed especially at young people is a              
 factor, as well as taxes.  It is her belief that as a single                  
 action, raising taxes is the most powerful and effective tool.  She           
 urged the committee to pass this legislation.                                 
                                                                               
 Number 2108                                                                   
                                                                               
 REPRESENTATIVE ROBINSON remarked that she is in favor of the tax              
 and it is her hope that the tax increase will bring down tobacco              
 consumption.  She has personal experience with family and friends             
 of just how difficult it is to make the decision to quit smoking.             
 She asked Dr. Farley what kind of advice she gives her patients in            
 smoking cessation counseling.  Also, what avenues did Dr. Farley              
 feel should be explored for counseling for addiction within the               
 school system.                                                                
                                                                               
 DR. FARLEY said individually, when she is seeing a teen-ager or               
 pre-teen she brings up the issue of smoking to find out what their            
 beliefs are, have they experimented, what are their friends doing             
 as far as smoking, to get a conversation established and make the             
 point of how quickly a person can become addicted, etc.  Dr. Farley           
 commented she had personal experience with that because she started           
 smoking at the age of 11 and was firmly hooked by the time she was            
 13.  It was surprising to her how quickly it happened.  After                 
 several attempts, she was able to quit smoking at the age of 19.              
 One of the things limiting her effectiveness is that most young               
 people at that age are very healthy and don't come to the doctor              
 very often.  There is what she believes to be a very good education           
 program in Alaska called "Here's Looking at you 2000".  It includes           
 some conflict resolution, deals with issues of drugs, alcohol,                
 tobacco and different forms of abuse.  It is a comprehensive                  
 program and she has observed the use of it in the Juneau School               
 District.  She commented it is surprising how little effect                   
 education by itself has and how much effect the economic factor               
 has.  As far as helping people stopping to smoke, she thinks many             
 people will be encouraged to either quit or cut down their                    
 consumption which will benefit their health.                                  
                                                                               
 REPRESENTATIVE ROBINSON asked if there was any one direct tool                
 available to use with young people.                                           
                                                                               
 DR. FARLEY thought that was an area that required more attention.             
 She has often wondered if there shouldn't be in-patient treatment             
 programs for helping people to stop smoking.  She commented that              
 many researchers feel it is as addictive as heroin.  One of the               
 suggestions she makes to children who are smoking and have a lot of           
 friends who are smoking is to look for some new friends.  Some                
 children have heeded that advice and gotten into an activity with             
 a group of kids who are more athletic, musical or whatever.                   
                                                                               
 Number 2280                                                                   
                                                                               
 BOB BARTHOLOMEW, Deputy Director, Division of Income & Excise                 
 Audit, Department of Revenue, testified on the tax rate changes and           
 the financial impacts.  The current tobacco tax is collected                  
 primarily from the cigarette and tobacco wholesalers and is 29                
 cents for a pack of cigarettes, or 25 percent of the wholesale                
 price.  Those rates were implemented in 1989.  The proposed                   
 legislation would raise the tax on a pack of cigarettes $1.00 to              
 $1.29, and increase the tobacco products tax to 100 percent of the            
 wholesale price.  The FY 97 increase which would be effective                 
 October 1, would be a nine month period of increased taxes, and               
 would raise $33.4 million.  That is based on the current                      
 consumption rates, less an elasticity factor to show what happens             
 to consumption when the price is raised.  The department relied on            
 a 1994 Surgeon General's report to calculate the elasticity.  As              
 Co-Chair Bunde had stated earlier, 5 cents of the current 29 cent             
 tax goes into a school fund; the remainder of the tax plus all of             
 the tobacco products tax goes into the general fund.                          
                                                                               
 TAPE 96-5, SIDE B                                                             
 Number 001                                                                    
                                                                               
 MR. BARTHOLOMEW said the department currently has a zero cost to              
 implement.  The program would be identical to what is in place with           
 the current level of compliance being maintained.  They will                  
 monitor the program and if other issues related to compliance                 
 arise, the department would need to examine that and address the              
 appropriate measures that would need to be taken.  At this time               
 however, the compliance program that is in place currently will be            
 continued.                                                                    
                                                                               
 CO-CHAIR TOOHEY asked how much revenue was currently collected.               
                                                                               
 MR. BARTHOLOMEW answered $17 million.                                         
                                                                               
 CO-CHAIR TOOHEY pointed out that it would virtually double, and               
 asked if there wouldn't be any added costs.                                   
                                                                               
 MR. BARTHOLOMEW said currently, the department would not increase             
 the amount of paperwork or the number of tax returns being filed,             
 there would just be larger checks.  For FY 98, which would be the             
 first full year at the higher tax rate, the increase would be $44             
 million.  Basically, it would more than double.  Under HB 431, the            
 cigarette tax would increase every three years.  For example, on              
 July 1, 1999, this bill would increase the rate again by 24 cents             
 a pack; in 2002 it would be raised again by 24 cents a pack and so            
 forth.  With regard to the tobacco products tax, the rate change              
 would be every two years which would be based on the consumer price           
 index.  He explained that was basically to keep from losing pace              
 with inflation, as has happened in the past.                                  
                                                                               
 Number 088                                                                    
                                                                               
 CO-CHAIR BUNDE asked Mr. Bartholomew what the department is                   
 projecting the total tax income to be for the first effective year            
 if this bill became law.                                                      
                                                                               
 MR. BARTHOLOMEW said he would break it into two sections.  The                
 total revenue raised in FY 97, which would have nine months of an             
 increase, would be $50 million.  Current revenues are $17 million,            
 so there would be a net increase of $33 million.  In FY 98, the               
 total tax raised would be $61.8 million, with a net increase of $44           
 million.                                                                      
                                                                               
 CO-CHAIR BUNDE referred to the 5 cents of the current amount that             
 goes into the schools and asked what percentage would be dedicated            
 to schools under the proposed legislation, or would it remain at 5            
 cents.                                                                        
                                                                               
 MR. BARTHOLOMEW replied under this legislation, the amount going              
 into the school fund would remain as it is currently, and the                 
 increases would go into the general fund.                                     
                                                                               
 CO-CHAIR TOOHEY inquired of the sponsor why the proposed                      
 legislation didn't start off at $1.00 per pack.                               
                                                                               
 CO-CHAIR BUNDE responded it does.                                             
                                                                               
 CO-CHAIR TOOHEY asked if it goes to $1.25, $1.50 and so forth.                
                                                                               
 MR. BARTHOLOMEW explained the current tax is 29 cents a pack.  HB             
 431 raises the tax initially $1.00 to $1.29 a pack; then raises it            
 24 cents a pack every three years after that.                                 
                                                                               
 Number 145                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG referred to Section 4 which bases the                 
 amount of a tax change on the Anchorage Metropolitan Area, Bureau             
 of Labor Statistics (BLS), Consumer Price Index (CPI) inflator and            
 asked Mr. Bartholomew if the Anchorage Metropolitan statistics are            
 published once or twice a year.                                               
                                                                               
 MR. BARTHOLOMEW responded he would have to check with the                     
 Department of Labor on that.                                                  
                                                                               
 REPRESENTATIVE ROKEBERG said he thought it was once a year.  He               
 felt it was a very poor measure to use on any kind of a CPI clause            
 where the statistics are only published once a year.  His                     
 experience in the business world has been that utilization of the             
 U.S. (indisc.) City Averages is much better because there is a                
 monthly baseline figure.  He suggested someone look into that.                
 Representative Rokeberg asked Mr. Bartholomew if the Governor had             
 drafted a similar bill or if he had worked on any statistics of               
 revenue measures in the Administration's program.                             
                                                                               
 MR. BARTHOLOMEW replied the division had done some work in support            
 for the Long Range Financial Planning Commission (LRFPC).                     
                                                                               
 REPRESENTATIVE ROKEBERG asked if the LRFPC had a similar stair                
 stepping mill rate increase.                                                  
                                                                               
 MR. BARTHOLOMEW thought the LRFPC bill recommended the same rate              
 increases as this legislation recommends.                                     
                                                                               
 REPRESENTATIVE ROKEBERG asked Co-Chair Bunde if that's correct.               
                                                                               
 CO-CHAIR BUNDE replied yes.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG asked what the rationale was for that.                
                                                                               
 CO-CHAIR BUNDE said it was to prevent the erosion because of                  
 inflation as had been previously testified to.                                
                                                                               
 CO-CHAIR TOOHEY reminded committee members there were 13 people               
 signed up to testify and called the next witness to come forward.             
                                                                               
 Number 253                                                                    
                                                                               
 HARLAN KNUDSON, President, Alaska State Hospital & Nursing Home               
 Association, testified he wanted to give four reasons for                     
 testifying before the committee.  First, the Alaska State Hospital            
 & Nursing Home Association was invited to join the other health               
 care providers in working as a group to support HB 431.  This group           
 of health care providers see the effects of tobacco use every day             
 in the hospitals and with their friends.  The feeling amongst the             
 group was that they were not being good citizens of the state if              
 they didn't support this legislation on behalf of the hospital                
 community.  Second, is a personal reason.  He had his last                    
 cigarette the day before he was diagnosed with prostate cancer.  He           
 has a scar to remind him that it is not a good idea to smoke.  He             
 personally is asking the committee to support this legislation.               
 Third, this is not a vote for a tax increase; it is a vote for                
 common sense, a vote for public health, and a vote he hopes the               
 legislators will not walk away from.  His final reason for                    
 testifying was because of the cost of health care.  He said one of            
 these days there is going to be good reliable data that will show             
 just how much cancer costs.  State medicare costs need to be looked           
 at when we are talking about balancing the budget.  He discussed              
 the high incidence rate of cancer among the Native community and              
 concluded that this legislation is a solid step toward good health            
 care.                                                                         
                                                                               
 Number 403                                                                    
                                                                               
 MIKE KORKILL, Member, Adolescent Health Advisory Committee,                   
 testified via teleconference from Fairbanks.  The Adolescent Health           
 Advisory Committee is made up of a group of Alaskans who have a               
 united commitment to well-being and healthy lifestyles for Alaskan            
 adolescents as well as individuals in the context of family                   
 (indisc.).  They look at known routes to health problems and                  
 recommend approaches for improvement through community coordination           
 and collaboration.  They also seek to preserve the rights of all              
 Alaskan adolescents to grow and develop in an environment of a                
 physical, mental, social and spiritual being.  He commented that a            
 group of committee members assembled last week to review the House            
 and Senate versions of this bill.  He added there are studies which           
 indicate that tobacco tax increases, specifically in Canada and               
 California, reduced tobacco consumption by teens.  It is the                  
 feeling of the advisory group that it is in the best interest of              
 Alaskan teens to use the revenues generated from the tax to promote           
 tobacco cessation programs around the state.  The advisory                    
 committee very strongly supports this legislation.                            
                                                                               
 Number 545                                                                    
                                                                               
 JIM PLUMLEY testified via teleconference from Mat-Su as a private             
 citizen and a former state employee who retired when he was                   
 diagnosed with leukemia in June 1993.  He said he never liked being           
 around smoke, but was around it constantly as an employee of the              
 jail system.  While receiving treatment at the University of                  
 Washington Hospital, he saw people hooked up to Ivs or had just               
 received chemotherapy who were standing outside having a cigarette.           
 He understands how addictive nicotine can be.  He is in favor of              
 raising the cigarette tax and is hopeful the state, through the               
 increased tax can educate people more on the negative effects of              
 tobacco.                                                                      
                                                                               
 Number 614                                                                    
                                                                               
 PATTI TRUESDELL testified via teleconference from Soldotna that she           
 was not testifying as a 20-year employee of the hospital, not as a            
 Freedom From Smoking consultant, and not as the coordinator for the           
 Tobacco (indisc.), but as a former nicotine addict.  She spoke of             
 prior experiences of tearing down the anti-smoking signs, and being           
 one of those individuals standing outside smoking.  As a former               
 smoker and mother of four children, she is in favor of the tobacco            
 tax increase.  She is in favor of anything that will help reduce              
 the number of children smoking, children starting to smoke,                   
 children buying tobacco products and children experimenting with              
 tobacco.  She is aware that a lot of children in the Soldotna area            
 chew and smoke tobacco.  She concluded by saying the legislature              
 needs to do their job, and in turn the public will do theirs at the           
 local level by making sure the laws are enforced, compliance is               
 checked, and that the schools are doing their part with education.            
                                                                               
 Number 707                                                                    
                                                                               
 PEGGY MULLEN testified via teleconference from Soldotna as a former           
 nicotine addict.  She smoked for what she termed as an                        
 embarrassingly long time and quit 14 years ago.  She experimented             
 with tobacco as a teen-ager, but didn't really get involved with it           
 until she was in college.  As a shy person in her 20s, it made her            
 feel braver, smarter, and more focused.  She fell for the                     
 advertising that portrays cigarette smoking as beguiling and a very           
 sexy sort of drug delivery system.  In the later years of her                 
 addiction, she realized she was hurting not only herself, but the             
 people she loved.  She had a difficult time quitting; it took                 
 several tries over a period of several years.  She finally quit               
 after getting angry with her father who was a recovering stroke               
 victim who drank and smoked for several years.  When he started to            
 smoke again, she got angry enough at him to cause her to quit                 
 smoking herself.  She asked the committee to seriously consider               
 using some of the increased tax revenues to promote an advertising            
 campaign to keep children from starting to smoke.  She mentioned              
 that other states like California are beginning to see some success           
 with a "smoking is not cool" advertising campaign.                            
                                                                               
 Number 832                                                                    
                                                                               
 VEVA BECKER, American Cancer Society, testified from Fairbanks that           
 she is pleased the state of Alaska is taking a stand against                  
 tobacco.  It is a great step forward.  She has been a tobacco                 
 educator for youth and adults with the American Cancer Society for            
 over 25 years.  In past years, there was a decreased use of tobacco           
 with the youth, but today more kids are smoking than ever, not only           
 in Fairbanks but in all of the Interior.  She commented that most             
 of the smoking kids live with smoking parents.  She spoke of the              
 respiratory problems and lung cancer among people of all                      
 nationalities at a younger age.  She expressed concern about the              
 increased use of cigarettes and non-smoking tobacco among the                 
 Native population.  She supports the tobacco tax increase because             
 nothing else is working at this time.  She would like to see                  
 cigarette machines outlawed because of the easy access for kids.              
 Even though sales clerks have been educated about the sale of                 
 tobacco products, there is a lot of work that still needs to be               
 done in that area.  Tobacco advertising in all media forms hurts              
 Alaska's youth.                                                               
                                                                               
 CO-CHAIR TOOHEY noted that written testimony from Kathleen Jones of           
 Homer had been received and was included in committee member                  
 packets.                                                                      
                                                                               
 Number 962                                                                    
                                                                               
 TOM DANIELS, Member, Board of Directors, Alaskan Chapter, American            
 Cancer Society, testified from Anchorage via teleconference.  He              
 stated the American Cancer Society is the largest voluntary                   
 community-based health organization in the world.  In Alaska, there           
 are more than 4,000 volunteers performing the vital work of the               
 cancer society.  People from all walks of life here in Alaska share           
 their special talents and time to help fight cancer.  He said he              
 was testifying before the HESS Committee in support of HB 431.  He            
 knows the word taxes conjures up a very negative feeling among many           
 people, but there is a growing movement to use taxes to accomplish            
 a positive result - to protect children from tobacco addiction.               
 One of the American Cancer Society's goals for the year 2000 is to            
 reduce smoking by Alaskan youth.  As a private organization, they             
 provide public education concerning the dangers of smoking, but               
 they cannot do the job alone.  He told committee members that as              
 elected representatives of the people of Alaska, they could help              
 with this important task by passing this tax; thereby providing a             
 powerful incentive to reduce smoking.  He pointed out this is not             
 just another tax.  It is a strong public health measure.  He                  
 concluded with a quote from former Surgeon General, C. Everett                
 Koop, "A cigarette tax is different because it helps almost                   
 everyone.  Smokers would benefit because it would help them to                
 quit.  Non-smokers would benefit because the air they breathe would           
 have less harmful smoke.  Children would benefit because fewer kids           
 would get hooked on cigarettes.  The only real losers would be the            
 tobacco industry."  He strongly urged committee members to support            
 the increase in taxes on tobacco.                                             
                                                                               
 Number 1083                                                                   
                                                                               
 JENNY MURRAY, Tobacco Policy Coordinator, American Lung Association           
 of Alaska, testified via teleconference from Anchorage regarding a            
 survey that was conducted on behalf of the American Cancer Society            
 to help them assess the level of support among Alaskans for tobacco           
 taxes.  The survey was conducted statewide to assess the support              
 for an increase of $1.00 a pack.  Based on surveys done in the                
 Lower 48 and in Anchorage in 1994, they expected to see strong                
 support in the neighborhood of 60 to 65 percent, but it was even              
 better than that.  In a statewide sample, 74 percent of Alaskans              
 favored increasing Alaska's tobacco taxes by $1.00 per pack.                  
 Because the publicity of the tobacco tax proposal has been mostly             
 in the context of addressing the state's fiscal gap, the survey               
 began with questions about the whole issue.  For example, the                 
 survey revealed that 74 percent of Alaskans had heard about the               
 budget gap.  The second question on the survey was "Alaska's state            
 budget is about $500 million larger than the revenues it will take            
 in this year.  Most of this revenue is from oil and gas taxes.                
 People have different views about how to deal with this fiscal gap.           
 Do you think the fiscal gap can be closed with a mix of spending              
 cuts and new revenue sources?"  Only 16 percent of the individuals            
 who responded felt that spending cuts alone would be enough to                
 close the budget gap.  On the other hand, 72 percent indicated it             
 would take a mix of spending cuts and new revenue sources.                    
                                                                               
 MS. MURRAY further stated that questions were then asked to                   
 determine which of the measures proposed by the Long Range                    
 Financial Planning Commission to close the fiscal gap were most               
 popular among Alaskans.  The survey results indicated that tobacco            
 taxes were far and away the most popular method of reducing the               
 budget gap.  Another question asked was, "If it was proven that a             
 large cigarette price increase prevents or reduces smoking among              
 children and teen-agers, would you favor or oppose raising the                
 state tax by $1.00 per pack?"  Eighty-six percent of those                    
 individuals polled indicated they would favor the tax increase.               
 She concluded that of course, we are all aware that tobacco taxes             
 do reduce smoking by kids.  The public message is clear that                  
 Alaskans support tobacco taxes, they understand that new revenue is           
 needed to balance the state budget, and believe in protecting kids            
 from tobacco.  She strongly urged the committee to support HB 431.            
                                                                               
 Number 1242                                                                   
                                                                               
 ANNE MARIE HOLEN testified via teleconference from Anchorage on               
 behalf of the Alaska Native Health Board and its statewide                    
 membership in support of HB 431.  She said the increase in tobacco            
 taxes is the number one state legislative priority for the Alaska             
 Native Health Board this session.  Alaska Natives account for over            
 23 percent of the smoking-related deaths in the state, even though            
 they make up only 16.5 percent of the population.  No one expects             
 higher taxes to be a panacea for the tobacco problem in rural                 
 Alaska, but the research clearly indicates that it will help.  She            
 pointed out that tobacco is not just a Native problem in Alaska.              
 A recent Center for Disease Control report reveals that smoking               
 rates among the white population in Alaska are also above the                 
 national average.  The tobacco epidemic is a serious problem in               
 Alaska; Native and non-Native, smokers and non-smokers, kids and              
 adults.  The Alaska Native Health Board strongly urges the                    
 committee's support for HB 431.                                               
                                                                               
 Number 1311                                                                   
                                                                               
 MICHAEL LIVINGSTON testified via teleconference and urged the                 
 committee to pass HB 431 as an effective tool to combat Alaska's              
 epidemic of teen-age tobacco smokers.  During his 16 years as a               
 police officer in Alaska, he has seen the number of teen smokers              
 skyrocket.  He commented on having seen as many as 300 students at            
 local high schools standing outside smoking cigarettes on their               
 lunch break.  If we allow the youth to hang around and get addicted           
 to a legal substance such as tobacco, it becomes easier for them to           
 get addicted to other illegal substances such as alcohol, marijuana           
 and harder drugs.  There are areas around the high schools known as           
 smoking pits or smoking tunnels that are hot spots for criminal               
 activity, including weapons offenses, felony assaults and attempted           
 homicides.  On the other end of the spectrum, Mr. Livingston as a             
 police officer, has had to respond to deaths caused by tobacco                
 consumption.  Alaska's law enforcement code of ethics states that             
 his fundamental duty as a police officer is to safeguard lives, to            
 protect the innocent against deception and the weak against                   
 oppression.  He has attempted to fulfill his duty by issuing                  
 citations to minors for possession of tobacco.  However, one police           
 officer issuing one ticket and thousands of teen smokers is like              
 the little Dutch boy holding his finger in the dye.  He asked                 
 committee members to please stop the flood of Alaska children                 
 walking into an early death, to safeguard lives and protect the               
 innocent against deception by passing HB 431.                                 
                                                                               
 Number 1417                                                                   
                                                                               
 CO-CHAIR TOOHEY asked Mr. Livingston if there are laws currently on           
 the books that are strong enough, but are not being enforced.  She            
 was aware of the laws that prohibit the sale of tobacco products to           
 children under the age of 19 and the restrictions on cigarette                
 machines, but wanted to know if there were other things that could            
 be done, as a legislative body, to prevent the sale of cigarettes             
 to children.                                                                  
                                                                               
 MR. LIVINGSTON responded that hundreds of citations have been                 
 issued to minors for the possession of tobacco.  He has questioned            
 about 150 minors himself to determine where they get the tobacco              
 from.  Their response is they walk into a store and buy it; these             
 are 14- and 15-year-olds walking into stores in Anchorage buying              
 tobacco with no problem.  While the police have issued hundreds of            
 citations to minors, they have not issued one citation to a                   
 business in Anchorage for the sale of tobacco to minors that Mr.              
 Livingston is aware of.  When he goes into a store in his police              
 uniform, surprisingly the transaction does not occur.  One way for            
 a police officer to put a stop to the illegal sale of tobacco to              
 minors would be for the police officer to use youngsters to buy the           
 tobacco.  When the sale is completed, the police officer could then           
 issue a citation to the business for the illegal sale.  He has                
 asked permission from his police department more than once, but it            
 is illegal for him to do that.  The reason being that he would be             
 allowing a minor to possess tobacco.  Until an exception is made in           
 Alaska as has been made in many other states, he is forbidden from            
 doing what he would like to do.                                               
                                                                               
 CO-CHAIR TOOHEY said it was a shame that police officers' hands are           
 tied, and will look at other available options.                               
                                                                               
 CO-CHAIR BUNDE remarked there will be another bill that will                  
 address that problem.                                                         
                                                                               
 REPRESENTATIVE ROBINSON thought these sting operations were being             
 carried out in Juneau through the Seven Circles.  She added the               
 main idea at this point is not to go after the businesses, but to             
 educate businesses on what is happening so they will make the                 
 necessary changes.                                                            
                                                                               
 CO-CHAIR TOOHEY asked Luke Whitehead to present his testimony.  The           
 Anchorage Legislative Information Office advised that Mr. Whitehead           
 had written testimony that would be submitted to the HESS                     
 Committee.                                                                    
                                                                               
 Number 1575                                                                   
                                                                               
 JUDITH MULLER, Executive Director, Alaska Health Fair; also                   
 Chairman, Alaska Tobacco Control Alliance, testified via                      
 teleconference.  She said the Alaska Health Fair works with                   
 villages across the state organizing and planning their grassroots            
 health education event.  There isn't one community in Alaska where            
 tobacco isn't a big concern.  For that reason, Alaska Health Fair             
 supports the taxation as a way to deal with the tobacco problem.              
 She said the Alaska Tobacco Control Alliance consists of 220                  
 organizations and agencies who share a strong commitment to                   
 reducing the use of tobacco.  The 220 organizations and agencies              
 represent an organized mass of literally tens of thousands of                 
 Alaskans, including people from every urban community of the state,           
 most of the Native health corporations, professional health                   
 organizations and nonprofit agencies.  This group works daily to              
 reduce the use of tobacco in Alaska.  A recent resolution put forth           
 by the Alliance last month calls upon the legislature to enact a              
 significantly higher state excise tax on all forms of tobacco and             
 to ensure that this higher tax rate is regularly increased to keep            
 pace with inflation.  They agree that taxation is a good way to               
 reduce the use of tobacco and strongly support this legislation.              
                                                                               
 Number 1680                                                                   
                                                                               
 DELISA CULPEPPER, Alaska Public Health Association, testified via             
 teleconference from Anchorage and strongly urged the committee to             
 support this legislation.  She said public health professionals               
 across the state are working, like the Alaska Tobacco Control                 
 Alliance, to protect kids from tobacco.  She referred to a                    
 prevention initiative and said while we have to work on behavioral            
 aspects with individuals, an environment that allows children to              
 have financial access to cigarettes is a poor environment to try to           
 prevent them from beginning to use tobacco.  Financial strategies             
 are important and the Alaska Public Health Association believes               
 they can work well.                                                           
                                                                               
 Number 1730                                                                   
                                                                               
 DR. RODMAN WILSON, Acting Executive Director, Alaska State Medical            
 Association, testified from Anchorage.  He said the Alaska State              
 Medical Association strongly supports HB 431.  During the mid-80s             
 when he was working in the Municipality of Anchorage Health                   
 Department, he studied all deaths in Anchorage.  He analyzed the              
 contribution of tobacco to those deaths and calculated that 713, or           
 21 percent, of the 3,435 deaths were caused by tobacco.  He                   
 mentioned the state Department of Health, Section of Epidemiology             
 did a similar study statewide for the period of 1992 to 1994 and              
 came up with a similar result of 20 percent.  Dr. Wilson said this            
 is an opportunity for the legislature to do something significant             
 with respect to the health hazards of cigarettes and other forms of           
 tobacco.  In conclusion, Dr. Wilson said in the next century when             
 somebody writes the social and commercial history of the United               
 States, one of the blackest pages is going to be that when we began           
 to know by mid-century how dangerous tobacco was, we did so little            
 about it.                                                                     
                                                                               
 Number 1901                                                                   
                                                                               
 RUTH PARRIOTT, Representative, Tobacco Tax Policy Project, American           
 Cancer Society, also testified on behalf of the full coalition of             
 heart, lung and Native health boards.  She said a number of years             
 ago, the American Cancer Society was wondering what they were doing           
 talking about increasing taxes and how they found themselves in               
 that position.  All of the collective research led them to one                
 inevitable conclusion:  It is their mission to reduce the suffering           
 that results from cancer.  Research indicates the single most                 
 effective way to do that is to prevent children from starting in              
 the first place and the single most effective way of doing that is            
 to apply economic disincentives.  She noted the fiscal and tax                
 policy debates currently taking place and said there are some                 
 individuals who believe that tobacco is a matter of free choice and           
 shouldn't be used in fiscal policy debates and other state                    
 legislation to influence behavior and choices of individuals.  She            
 said a part of us buys into that.  Like many Americans, we believe            
 the ultimate responsibility for protecting our children takes place           
 in the homes where parents share their lessons with children, and             
 in the support of community-based schools and churches.  In support           
 of that, the American Cancer Society has been providing all of the            
 information and support to those institutions for decades.                    
 However, when those children walk outside the doors and are                   
 bombarded by a $6 billion a year advertising campaign from the                
 tobacco industry which tells the kids that smoking is cool, then it           
 becomes time to change that larger environment in any way we can.             
                                                                               
 MS. PARRIOTT stated the tobacco industry will tell you this is bad            
 fiscal policy.  She told committee members that a Washington, D.C.            
 firm has been hired by the industry to tell you that your                     
 Department of Revenue doesn't know what they are talking about;               
 they've apparently over-estimated the revenues that will be gained.           
 However, in doing so, apparently the Surgeon General doesn't know             
 what he is talking about either because the department relied on 30           
 years of economic data from the Surgeon General's Office to                   
 determine a price elasticity.  She urged committee members to                 
 listen to the arguments made by the industry as the debate unfolds.           
 The first thing they will tell you is that it won't generate this             
 much revenue because the department is over-estimating.  The second           
 thing will be that this doesn't work.  She said the industry's own            
 charts indicate there is a -.4 elasticity; that means every time              
 tobacco prices are raised by 10 percent, 4 percent of sales are               
 going to drop off.  That's what the industry is worried about, no             
 matter what they tell you.  By taking this health measure, fewer              
 cigarettes will be sold in the state of Alaska.  That means the               
 tobacco industry will make less money in the state.  Ms. Parriott             
 concluded by saying we acknowledge that, but we believe the health            
 of Alaskans is more paramount than the profits of the tobacco                 
 industry.                                                                     
                                                                               
 CO-CHAIR TOOHEY asked if there was any further public testimony.              
 Hearing none, public testimony was closed.                                    
                                                                               
 CO-CHAIR BUNDE asked to make a closing statement.  He, like                   
 probably a lot of other people, wished this proposed tax would not            
 raise a nickel.  But that is unrealistic.                                     
                                                                               
 TAPE 96-6, SIDE A                                                             
 Number 007                                                                    
                                                                               
 CO-CHAIR BUNDE continued that one of his favorite musicians, Willie           
 Nelson, said that he has tried them all, referring to illegal                 
 substances, and the toughest of all to quit was cigarettes.  He               
 said that no legislator ever looks lightly at taxing the citizens             
 and no constituency is anxious to be taxed.  The surveys however,             
 indicate the public feel this is an appropriate measure and he                
 simply would like for the legislature to put aside their concerns             
 about taxation and look at it as an economic barrier to young                 
 people.                                                                       
                                                                               
 Number 101                                                                    
                                                                               
 CO-CHAIR BUNDE made a motion to pass HB 431 from the HESS Committee           
 with accompanying fiscal notes and individual recommendations.                
                                                                               
 Number 117                                                                    
                                                                               
 REPRESENTATIVE ROBINSON thanked the sponsor for what she perceived            
 to be one of the most important aspects of this bill; the public              
 education that will take place.  She would like to perhaps have               
 another opportunity to discuss other things that could be done to             
 get more public education.  One of the areas she is personally                
 concerned about is the area of finding a smoke free environment for           
 people who are trying to move away from an addiction.  For example,           
 AA meetings that are non-smoking, counselors who don't smoke in               
 counseling sessions, etc.  She commented she is not out to ban                
 smoking because she doesn't think it works; but she is working                
 toward public education and trying to get people to make that                 
 decision for themself.  She would also like the committee to                  
 consider putting some of the beginning revenues into the Children's           
 Trust.  She recognized that a fund couldn't be dedicated, but felt            
 they could make a strong statement that a portion of this money               
 should be appropriated into the Children's Trust.                             
                                                                               
 CO-CHAIR TOOHEY pointed out that as a person who started smoking at           
 the age of either 14 or 15, she ended up smoking three packs of               
 cigarettes a day and loved every cigarette she smoked.  She quit 13           
 years ago.  For those people who testified before the committee who           
 stated it was difficult to quit, she said it is not difficult to              
 quit; a person only needs to make up their mind that they are going           
 to stop.  It's like any other addiction, you can stop.  Her advice            
 is to have someone who has also quit help you get through the first           
 few days.  It can be done, so don't be discouraged by people saying           
 it's impossible to quit.                                                      
                                                                               
 Number 371                                                                    
                                                                               
 CO-CHAIR TOOHEY asked if there was any objection to the motion to             
 pass HB 431 out of committee.  Hearing none, HB 431 passed out of             
 the House HESS Committee with accompanying fiscal notes and                   
 individual recommendations.                                                   

Document Name Date/Time Subjects