Legislature(1997 - 1998)
01/30/1997 08:00 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 30, 1997
8:00 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Ethan Berkowitz
Representative Fred Dyson
Representative Kim Elton
Representative Mark Hodgins
Representative Ivan Ivan
Representative Al Vezey
MEMBERS ABSENT
All members present.
OTHER HOUSE MEMBERS PRESENT
Representative Con Bunde
COMMITTEE CALENDAR
HOUSE BILL NO. 1
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 52
"An Act relating to taxes on cigarettes and tobacco products; and
providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 1
SHORT TITLE: CIGARETTE AND TOBACCO TAX
SPONSOR(S): REPRESENTATIVE(S) BUNDE, Ivan, Croft, Porter
JRN-DATE JRN-PG ACTION
01/13/97 26 (H) PREFILE RELEASED 1/3/97
01/13/97 26 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 27 (H) STATE AFFAIRS, HES, FINANCE
01/21/97 (H) STA AT 8:00 AM CAPITOL 102
01/21/97 (H) MINUTE(STA)
01/28/97 (H) STA AT 8:00 AM CAPITOL 102
01/28/97 (H) MINUTE(STA)
01/30/97 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 52
SHORT TITLE: INCREASE TOBACCO TAXES
SPONSOR(S): REPRESENTATIVE(S) JAMES
JRN-DATE JRN-PG ACTION
01/13/97 41 (H) PREFILE RELEASED 1/10/97
01/13/97 41 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 41 (H) STATE AFFAIRS, HES, FINANCE
01/21/97 (H) STA AT 8:00 AM CAPITOL 102
01/21/97 (H) MINUTE(STA)
01/28/97 (H) STA AT 8:00 AM CAPITOL 102
01/28/97 (H) MINUTE(STA)
01/30/97 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
VINCENT USERA, Assistant Attorney General
Commercial Section
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-4118
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BOB BARTHOLOMEW, Deputy Director
Income and Excise Audit Division; and
Legislative Liaison
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-4773
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MARK D. SMITH, Director
National Coalition Against Crime and Tobacco Contraband
601 Pennsylvania Avenue
Washington D.C., 20004
Telephone: (202) 434-8179
DAVID L. WILLIAMS
420 West 12th Street
Juneau, Alaska 99801
Telephone: (907) 586-6178
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ROSIE T. SLOTNICK
1570 Evergreen Avenue
Juneau, Alaska 99801
Telephone: (907) 586-5767
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
HANNAH SLOTNICK
1570 Evergreen Avenue
Juneau, Alaska 99801
Telephone: (907) 586-5767
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
GEN GAYNE-HAWES
503 Fifth Street
Douglas, Alaska 99824
Telephone: (907) 364-2204
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
LAEL HARRISON
1718 Willow Drive
Juneau, Alaska 99801
Telephone: (907) 586-8992
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DAVID JOB
160 Behrends Avenue
Juneau, Alaska 99801
Telephone: (907) 586-3845
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ROBERT DICKSON
1320 "K" Street
Anchorage, Alaska 99501
Telephone: (907) 276-1700
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JENNIFER LOUDON
1940 Marthas Vineyard Circle, Apt. No. 4
Anchorage, Alaska 99507
Telephone: (907) 344-9687
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PAUL BARRETT
117 Bringham Way
Fairbanks, Alaska 99709
Telephone: (907) 479-5283
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
CLAUDIA ANDERSEN
2463 Green Acres Drive
Fairbanks, Alaska 99712
Telephone: (907) 488-6723
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
LOIS IRVIN
167 West Bayview Avenue
Homer, Alaska 99603
Telephone: (907) 235-7172
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DANIEL BOONE
P.O. Box 1783
Homer, Alaska 99603
Telephone: (907) 235-3779
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JUDY DOWNS
1616 Tanage Avenue
Kenai, Alaska 99611
Telephone: (907) 262-9137
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BARBARA WATERS
311 Kulila Place
Kenai, Alaska 99611
Telephone: (907) 283-3803
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DEBORAH WATTS, Executive Director
Alaskans for Drug Free Youth
2509 Tongass Avenue
Ketchikan, Alaska 99901
Telephone: (907) 247-2273
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MARSHA MAROELLI, Assistant Project Director
Bering Straight Community Partnership
P.O. Box 1350
Nome, Alaska 99762
Telephone: (907) 443-5888
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DUFFY HALLIDAY
P.O. Box 2105
Nome, Alaska 99762
Telephone: (907) 443-3470
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
WILL SWAGEL
P.O. Box 2844
Sitka, Alaska 99835
Telephone: (907) 747-5341
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
REX GARVER
P.O. Box 1564
Sitka, Alaska 99835
Telephone: (907) 747-3304
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
KATHERINE LIMON, Member
Juneau Tobacco Prevention Network
P.O. Box 21685
Juneau, Alaska 99802
Telephone: (907) 586-5061
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BANARSI LAL, Director-Alcohol and Drug Abuse Program
Fairbanks Native Association Inc.
201 First Avenue
Fairbanks, Alaska 99701
Telephone: (907) 452-1648
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
KATHERINE MCCONKEY
P.O. Box 14
Copper Center, Alaska 99573
Telephone: (907) 822-5875
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JAN MARQUISS
2230 Sentry Drive
Anchorage, Alaska 99507
Telephone: (907) 344-5267
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
PAT SENNER, Representative
Alaska Nurses Association
237 East Third Avenue, Apt. No. 3
Anchorage, Alaska 99501
Telephone: (907) 274-0827
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BILL BOUWENS
13 East 10th Avenue
Anchorage, Alaska 99501
Telephone: (907) 258-6253
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
VEVA BECKER
4137 Rosebud Lane
Fairbanks, Alaska 99709
Telephone: (907) 479-6968
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MARGARET WILSON
548 Aquila Drive
Fairbanks, Alaska 99702
Telephone: (907) 457-7798
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
KIM GREER
P.O. Box 1683
Homer, Alaska 99603
Telephone: (907) 235-4310
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MICKEY PICO
P.O. Box 20806
Juneau, Alaska 99802
Telephone: (907) 586-5778
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BONNIE JACK
1063 West 20th Avenue
Anchorage, Alaska 99503-1714
Telephone: (907) 279-4836
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BOYD MCFAIL
423 Lynnwood Drive
Anchorage, Alexia 99518
Telephone: (907) 562-5906
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
LAURA SARCONE
1702 McKinley Avenue
Anchorage, Alaska 99517
Telephone: (907) 561-2448
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
RICHARD H. RUSSELL
P.O. Box 1024
Bethel, Alaska 99559
Telephone: (907) 543-2624
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
KAY JONES
P.O. Box 1210
Homer, Alaska 99603
Telephone: (907) 235-6816
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
MARIANNA WOODWARD, President
Tanana Valley Clinic
1001 Noble Street
Fairbanks, Alaska 99701
Telephone: (907) 459-3500
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
CHERYL KILGORE
311 Hawk Road
Fairbanks, Alaska 99712
Telephone: (907) 457-1288
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
LARRY GRAHAM, Executive Director
Alaska Association of Secondary School Principals
1720 Otter Street
Anchorage, Alaska 99504
Telephone: (907) 333-9613
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JEAN MURRAY
P.O. Box 3033
Anderson, Alaska 99744
Telephone: (907) 582-2936
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
SYLVIA SCOTT
7400 East 17th Avenue
Anchorage, Alaska 99504
Telephone: (907) 333-3347
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
RICK SCOTT
7400 East 17th
Anchorage, Alaska 99504
Telephone: (907) 333-3347
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DAN LEVINSON
184 West Bayview Avenue
Homer, Alaska 99603
Telephone: (907) 235-5917
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
DARLEEN BELTZ
508 North Flower Street
Anchorage, Alaska 99508
Telephone: (907) 272-0892
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
BRUCE MCCURTAIN
7751 Lars Circle
Anchorage, Alaska 99518
Telephone: (907) 344-5467
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
JOANNE LOVITZ-EDMISTON
347 Dailey Avenue D-1
Anchorage, Alaska 99515
Telephone: (907) 349-8358
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
CODY MITCHELL
2901 Brookridge Circle
Anchorage, Alaska 99504
Telephone: (907) 333-5371
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
SUSAN FISCHETT
10336 Stewart Drive
Eagle River, Alaska 99577
Telephone: (907) 582-2936
POSITION STATEMENT: Provided testimony on HB 1 and HB 52.
ACTION NARRATIVE
TAPE 97-4, SIDE A
Number 0001
The House State Affairs Standing Committee was called to order by
Chair Jeannette James at 8:00 a.m. All members were present at the
call to order.
CHAIR JEANNETTE JAMES announced the committee would be hearing from
the public today on HB 1 and HB 52.
CHAIR JAMES explained the difference between the two bills. House
Bill 52 asked that the money went into a dedicated school fund for
construction and maintenance. House Bill 1 asked that the money
went into the general fund.
CHAIR JAMES stated there were complaints about the procedure
regarding public testimony. She explained she went down the list.
She did not select testimony based on opposition or support of a
bill. She would call on testifiers today that did not testify on
Tuesday, January 28, 1997.
HB 1 - CIGARETTE AND TOBACCO TAX
HB 52 - INCREASE TOBACCO TAXES
The first order of business to come before the House State Affairs
Standing Committee was HB 1, "An Act relating to taxes on
cigarettes and tobacco products; and providing for an effective
date." And, HB 52, "An Act relating to taxes on cigarettes and
tobacco products; and providing for an effective date."
CHAIR JAMES explained Vincent Usera, Department of Law, was here to
explain how the tobacco tax affected Indian country. Bob
Bartholomew, Department of Revenue, was also here to provide
testimony.
Number 370
VINCENT USERA, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law, said he was here in response to
a letter by Chair James addressing the possibility of a black
market in relation to Indian country, and how that affected the
collection of taxes. He stated under federal law, if cigarettes
were sold on Indian country to a member of the tribe, a tax could
not be collected. However, a tax could be collected on the sale to
a non-member. There were mechanisms to enforce the collection. In
many states there were cooperative relationships between the tribes
and the states to allow for the collection of the taxes from non-
Indians. He mentioned there was a supreme court case that
supported the states to require the Indian tribes to collect taxes
from non-Indians, and a supreme court case that addressed
enforcement mechanisms.
Number 0534
CHAIR JAMES asked Mr. Usera if one of the available enforcement
mechanisms was to have the Indian tribe sign a waiver of its
sovereignty rights?
Number 0553
MR. USERA replied, "No." That did not impinge on this at all. The
tribe could be required to collect the tax whether or not there was
sovereignty.
Number 0562
CHAIR JAMES asked Mr. Usera if that method would be at its source
of purchase? She asked Mr. Usera to provide some instances of
examples of how that would be done.
Number 0572
MR. USERA replied the normal method was the distributor placed a
stamp on the package of cigarettes and paid a tax for that stamp.
The most recent case in New York ruled that the sellers of
cigarettes on Indian reservations were required to obtain a state
certificate that allowed them to make an exempt sale. There was a
regulation in place in New York that allowed the state to impose a
probable demand figure, or an estimate of tax free sales. The
other cigarettes sold would already have the tax paid prior to
their receipt. There were other permutations, but, the before
described one had already been blessed by the United States Supreme
Court.
Number 0666
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division;
and Legislative Liaison, Department of Revenue, was the next person
to testify. He stated the division had talked to the state of
Washington to explore their experiences regarding this issue. In
Washington there were 26 official Indian reservations that sold
tobacco products. Currently, 16 of those Indian reservations were
cooperating with the state by filing tax returns, collecting taxes,
and making payments. The other 10 Indian reservations were not as
consistently cooperating with the state. The state was continuing
to work with those 10 Indian reservations to improve the situation,
however.
Number 0742
CHAIR JAMES stated she read that Oklahoma was the most successful
state in getting the waivers of sovereignty. She asked Mr. Usera
if he found that as well?
Number 0751
MR. USERA replied he did not see any waiver of sovereignty. He
reiterated the Supreme Court said that sovereign immunity did not
stand in the way of the state collecting valid taxes. Therefore,
sovereign immunity did not impinge on this question. If it
impinged at all, it was further down the road in terms of
enforcement. A state, for example, could not sue an Indian tribe
for not collecting the taxes. There were other mechanisms,
however, in place that were permitted.
Number 0782
REPRESENTATIVE ETHAN BERKOWITZ asked Mr. Usera what the enforcement
mechanisms would be in Indian country?
Number 0821
MR. USERA replied they ranged. He cited the Washington State vs
Confederate Tribe of Colville Indian Reservation case of 1980,
whereby the state of Washington confiscated the non-taxable
cigarettes on their way to the reservation because it had refused
to collect the taxes. Therefore, combining the New York ruling and
the Colville case holding, a mechanism could be to allow a certain
number of non-taxable cigarettes to a certain group, while
confiscating them if the tribe did not cooperate. This, however,
assumed that there would be a problem in collecting the taxes.
Number 0873
CHAIR JAMES wondered if the reservations could get their cigarettes
from a distributor that was not from the state, for example.
Number 0913
MR. USERA replied it was possible.
CHAIR JAMES stated somebody could be crooked if they really wanted
to be.
MR. USERA stated there was a way around just about everything.
CHAIR JAMES replied she understood. That was the challenge before
the committee.
Number 0925
REPRESENTATIVE MARK HODGINS asked Mr. Usera if military sales were
exempt from state taxes?
MR. USERA replied, "Yes."
REPRESENTATIVE HODGINS asked Mr. Bartholomew what portion would be
military sales?
MR. BARTHOLOMEW responded the division was in contact with the
Department of Military Affairs located on Elmendorf Air Force Base
in Anchorage. Military sales in Alaska were equivalent to non-
sales according to testimony last year. This year the sales were
about 40 percent according to the Department of Military Affairs.
The division showed it was 8 percent of the total sales of
cigarettes in the state were taking place on the military bases.
In November of 1996, the President passed an administrative action
that required all the military bases in the United States to stop
subsidizing cigarettes and to go to the market price less the tax.
This would be a significant higher price than what they had been
paying. He did not have the price before the administration
action, however.
Number 1038
REPRESENTATIVE HODGINS asked Mr. Bartholomew if the division could
speculate on how much the military sales would expand because of
the tax? He wondered about the individuals who had access to the
bases, but were not utilizing their privilege now.
Number 1061
MR. BARTHOLOMEW replied the fiscal note asked for a half-time
auditor to focus on the tobacco tax. Furthermore, the division was
hoping to establish communications with the Department of Military
Affairs to monitor the sales activity to see if there was a change.
He explained the Department of Defense in Hawaii implemented
tighter restrictions when its tobacco tax was raised. It now only
allowed one carton of cigarettes to be sold instead of four.
Number 1142
REPRESENTATIVE HODGINS asked Mr. Bartholomew if the information on
the fiscal note anticipated smuggling, the prevention of smuggling,
and the law enforcement end of it?
Number 1155
MR. BARTHOLOMEW replied he could not speak to the law enforcement
end of it. The division did not expect an increase in cost,
administratively. Therefore, the fiscal note addressed solely the
compliance end of it. The half-time auditor position asked for in
the fiscal note would work 100 percent on compliance. The division
would call upon the Department of Law and the Department of Public
Safety if criminal activity was discovered.
Number 1212
CHAIR JAMES asked Mr. Bartholomew if the state had a tax stamp now?
MR. BARTHOLOMEW replied, "No." There were five states that did not
place a state stamp on cigarettes. The division was trying to get
information on that process to see if it made sense here in Alaska.
Number 1235
CHAIR JAMES asked Mr. Bartholomew if the division included the cost
of regulations in the fiscal note?
MR. BARTHOLOMEW replied the division did not include the cost of
regulations in the fiscal note. The division felt the additional
regulation activities would fit within its current operating
budget. However, there were additional compliance issues that
would arise that would require additions to the statutes.
Number 1288
CHAIR JAMES believed there needed to be some identification on the
cigarettes indicating that the tax had been paid for enforcement
purposes.
Number 1302
MR. BARTHOLOMEW responded the division was looking at that. The
division would want that written into statute. More information
was needed before action, however.
Number 1326
CHAIR JAMES replied some of those decisions should be legislatively
made as opposed to regulatory made so that the people would be more
knowledgeable about what was happening.
Number 1346
REPRESENTATIVE HODGINS asked Mr. Bartholomew, if this tax was
passed today, when would this process become efficient? How long
would it take for the Administration to come forward with the
necessary regulations?
Number 1370
MR. BARTHOLOMEW replied the division was now looking at what needed
to be put into statute as this bill moved into the next committee.
It would be necessary to look at the emergency regulation process
that had a 30 day window. And, where necessary, the division would
expedite the process to try and coincide with the increase in the
tax. He declared, recommendations would probably be made in the
next few weeks as more information from other states was obtained.
Number 1426
CHAIR JAMES stated there were other tobacco related bills that were
moving through the legislature. She anticipated a piggyback that
would not necessarily tie to this issue.
Number 1446
REPRESENTATIVE BERKOWITZ asked Mr. Bartholomew what sort of
recommendations were the Administration contemplating?
Number 1456
MR. BARTHOLOMEW replied the Administration was looking into the
state stamp, and how out-of-state wholesalers and mailers were
handled to minimize inappropriate sales. The Administration was
also furthering its communication and establishing a relationship
with the military bases. A list of compliances had not been
created at this point, however.
Number 1512
REPRESENTATIVE BERKOWITZ commented a current tax was in place. He
asked Mr. Bartholomew what was the current tax collection
mechanism?
Number 1528
MR. BARTHOLOMEW replied there was not a position that focused
solely on cigarette compliance. The division focused on the higher
dollars and monitored the sales and tax volumes, and there had not
been a change for the past two years to three years. There had not
been a lot of enforcement. That was the impetus to ask for funding
for an auditor as stated in the fiscal note; to prepare for the
potential avoidance.
Number 1571
REPRESENTATIVE BERKOWITZ asked Mr. Bartholomew if there were rates
of non-compliance given the current tax?
Number 1578
MR. BARTHOLOMEW replied the division did not have any indication
that there was non-compliance. No one had stepped forward or
claimed any inappropriate sales to protect his area of sales. And,
the division had not seen any decrease in tax revenues. Therefore,
the division assumed there was a high level of voluntary
compliance. That was how most tax programs started.
Number 1616
REPRESENTATIVE AL VEZEY asked Mr. Usera how many tribes were in
Alaska?
Number 1630
MR. USERA replied there were about 225 recognized tribes.
Number 1634
REPRESENTATIVE VEZEY asked Mr. Usera how many tribes were in the
rest of the United States?
MR. USERA replied he did not have a clue.
REPRESENTATIVE VEZEY asked Mr. Usera how many tribes could a person
belong to under current Indian law?
MR. USERA replied he was not certain but believed the number was
one.
Number 1678
REPRESENTATIVE VEZEY asked Mr. Usera what the qualifications were
to become a member of a tribe?
MR. USERA replied case law indicated that there was a certification
process to enroll into a particular tribe.
REPRESENTATIVE VEZEY asked Mr. Usera how many tribes could a person
be a member of in Alaska?
MR. USERA replied he understood the number to be one.
REPRESENTATIVE VEZEY asked Mr. Usera what were the requirements for
enrollment into a tribe in Alaska?
MR. USERA replied he did not know.
REPRESENTATIVE VEZEY asked Mr. Usera what prevented in law from a
person to enroll into a tribe that he so desired?
MR. USERA replied he did not know.
REPRESENTATIVE VEZEY asked Mr. Usera what prevented in law from a
person in Alaska from becoming a members of more than one tribe?
MR. USERA replied he did not know. He was willing to research the
question and get back to him, however.
REPRESENTATIVE VEZEY commented the state was looking at the issue
of tribal sovereignty. It could be possible that the majority of
the citizens could qualify as a member of these sovereign tribes,
or it could be a minority. He could see considerable problems of
trying to collect the sales tax when a significant portion of the
population was exempt. He felt this tax was going to create a
major black market industry. There were 230 tribes in Alaska and
under current law there was no limit as to how many tribes a person
could belong to, and there was no definition of who was a members.
It was who the tribe said it was. This tax could give economic
incentive to increase the movement toward sovereignty, and this was
a major problem to face.
Number 1800
MR. USERA commented the Alaska Native Claims Settlement Act (ANCSA)
made provisions to identify who was eligible to participate in a
Native corporation. He agreed the economics could be connected to
the participation in a Native cooperation.
Number 1826
REPRESENTATIVE VEZEY stated the attorney general had testified
before the House State Affairs Standing Committee and he indicated
that membership to a tribe was anyone that the tribe said was a
member. That was the sole ground of qualification of membership in
the state of Alaska. There was also no limit to the amount of
tribes a person could belong to because there was no choice
involved. "If they say you're a member, you're a member," he
stated. Therefore, it appeared this tax would create an economic
incentive to increase the movement towards sovereignty.
Number 1863
REPRESENTATIVE IVAN IVAN suggested to the Chair that the committee
invite the federal officials that oversaw the enrollment process to
clarify the questions and fears brought forward today.
Number 1882
CHAIR JAMES stated she appreciated the comment of Representative
Ivan. She agreed these were valid concerns and questions. It was
an issue that would require balance.
Number 1917
MR. BARTHOLOMEW stated the division was working and communicating
with the entities to help prevent bootlegging. The division did
not assume that there was going to be a massive bootlegging
problem. There was a difference between tax free sales on Indian
land and bootlegging. He reiterated the division thought it would
be able to work with a lot of different organizations to ensure
compliance.
Number 1967
CHAIR JAMES said she agreed with Mr. Bartholomew that the issues
were different, but she asserted they were also related.
Number 1973
REPRESENTATIVE BERKOWITZ called bootlegging an economic crime. He
asked Mr. Bartholomew what the cost of cigarettes were in Canada as
opposed to the United States?
Number 1990
MR. BARTHOLOMEW replied the current tax in Alaska was 29 cents, in
the Yukon Territory it was $1.16, and in British Columbia it was
$1.56. Even under the proposed tax the cost of cigarettes in
British Columbia would still be higher.
Number 2019
REPRESENTATIVE BERKOWITZ stated there was not much economic
incentive to come over to Canada. Prior testimony also indicated
that there was not much incentive to come through the Indian
country through applied restrictions, or through classic smuggling
operations. He asked Mr. Bartholomew if he knew about any classic
smuggling operations?
Number 2037
MR. BARTHOLOMEW replied, "Not to my knowledge."
Number 2042
REPRESENTATIVE HODGINS requested a revised tax revenue statement
taking into consideration the military, the legitimate sales with
the Natives, and the state sales.
Number 2065
MR. BARTHOLOMEW asked for clarification from Representative Hodgins
regarding his request.
REPRESENTATIVE HODGINS replied he wanted the total revenues. He
explained when this was originally brought forward the tax revenue
figures were about $40 million to $44 million. He would like to
see what the projected revenues would be now that it was understood
that the military and the Indian country would not be involved. He
wondered if this would generate the $40 million as expected.
Number 2102
MR. BARTHOLOMEW replied the current fiscal note excluded most of
what Representative Hodgins spoke to now. It was the current
taxable sales. It excluded the military and any other exemption or
tax-off sale. It was a projection based on the current taxable
items. He would go back to the department and see if there were
any other adjustments that could be made for compliance losses.
The department already took 18 percent off consumption due to the
price increase. The state of Washington, he explained, experienced
significant revenue increases. He reiterated he would go back to
the department and talk to them, but he did not expect much of a
change.
Number 2158
REPRESENTATIVE HODGINS also requested to see the work sheets.
Number 2163
REPRESENTATIVE VEZEY asked Mr. Bartholomew what percentage of
cigarette sales took place on military reservations?
Number 2173
MR. BARTHOLOMEW replied the division estimated about 9 percent of
the taxable sales took place on military reservations. The state
last year collected tax on 52 million packages of cigarettes.
Elmendorf Air Force Base estimated there were about 4.4 million
packages of cigarettes at the high end being sold on all military
installations in Alaska.
Number 2208
REPRESENTATIVE VEZEY believed that later testimony would indicate
higher numbers. He asked Mr. Bartholomew if he knew how many
consumers in Alaska had the privilege of going onto a military
reservation and purchasing items from the commissary? Alaska had
the highest percentage of military veterans of any state in the
union. He cited his neighborhood contained about 40 percent to 50
percent veterans. Most did not use the commissary privileges
because they got better economic buying power at the community
stores except for one item, cigarettes.
Number 2240
MR. BARTHOLOMEW responded currently Alaska statutes exempted sales
on military installations from taxes. The division was not 100
percent sure if that exemption could be removed. He did not say
that was being proposed, but it was an option. That was a very big
issue, but it could eliminate that compliance problem.
Number 2267
CHAIR JAMES commented she would not do anything that the veterans
did not want her to do. She had witnessed an entire gallery of
veterans on the floor of the House of Representatives.
Number 2277
REPRESENTATIVE KIM ELTON commented he understood the concerns of
the sales on the military bases, but one of the reasons for the tax
was to curtail teenagers from smoking and the children would not be
able to go onto the bases to shop.
Number 2297
CHAIR JAMES stated she appreciated Representative Elton for
bringing the committee back on track. However, it was appropriate
to review the possible unintended consequences.
CHAIR JAMES asked the committee members if they could stay longer
today to hear the teleconference testimony?
Number 2342
REPRESENTATIVE VEZEY replied he could stay a little while. He
asked the Chair if there would be any testimony on Saturday?
CHAIR JAMES replied she did not schedule a meeting on Saturday,
February 1, 1997.
Number 2377
REPRESENTATIVE VEZEY commented that a couple of his constituents
requested to testify on Saturday, February 1, 1997.
CHAIR JAMES apologized for canceling the meeting on Saturday. She
did not know that before canceling the meeting.
Number 2393
REPRESENTATIVE HODGINS stated he had a 10:00 a.m. meeting that he
was chairing so he would have to leave early.
Number 2398
REPRESENTATIVE ELTON stated he also had a committee conflict.
Number 2411
REPRESENTATIVE DYSON stated he had appointments.
CHAIR JAMES opened up the meeting to public testimony in Juneau and
to the teleconference network.
Number 2440
MARK D. SMITH, Director, National Coalition Against Crime and
Tobacco Contraband, was the first person to testify in Juneau. He
announced he was also a task force member on the American
Legislative Exchange Council Tax Committee, and was a tax issue
manager for the RJ Reynolds Tobacco Company. He had worked on the
issues of tobacco smuggling and contraband for the past four years
and had worked with some of the top people in the world on these
issues. He cited Ron Stemmler (ph), former Assistant Commissioner
of the Royal Canadian Mounted Police, as an example.
TAPE 97-4, SIDE B
Number 0001
MR. SMITH explained the coalition had conducted a lot of studies
exploring how contraband was brought into the country. He cited
studies had been conducted in California, Michigan and a national
study in 1994 on how contraband was smuggled into the country. The
coalition had also put together a law enforcement manual, that he
distributed to the committee members. He explained it was being
used currently by the Bureau of Alcohol, Tobacco and Firearms, the
United States Customs and other tax and law enforcement officials
throughout the United States. It was the best guide on how to stop
smuggling. He also urged the committee members to look closely at
the state of Washington as an example of Native American
involvement in tobacco sales. Washington reported that 15 percent
to 20 percent of the entire market was sold through the Indian
reservation system. In the state of New York tax collection and
enforcement were a terrible problem. There was concern of blood
shed. In past years when the state tried to enforce taxation
issues surrounding sovereignty the New York State throughway was
blocked off and helicopters were shot at. He did not believe that
Native Americans would act like that everywhere, but the Native
Americans in New York had a lock of 15 percent to 20 percent of the
entire market. It was a very lucrative business and attracted all
kinds of unsavory characters. Furthermore, he referred to an
article in the San Francisco Chronicle dated January 13 and read a
passage that suggested smuggling grew 250 percent from 1980 to 1984
in the United States due to tobacco taxes. He suggested that the
committee members talk to Robert Shepherd, chief law enforcement
official for the revenue department in New York, regarding the tax
stamp. New York discovered that within three weeks of establishing
the stamp, officials were discovering counterfeit. The tax stamp
was not a solution to the problem of a high tax. Furthermore, a
study that he came across indicated that 40 percent to 45 percent
of the entire market in the state of Alaska was in the hands of the
military today. He stated, if an illegal market was going to
emerge in the state of Alaska because of the high tax, the people
who distributed the cigarettes would not ask for age
identification.
Number 0195
REPRESENTATIVE BERKOWITZ asked Mr. Smith how much revenue the RJ
Reynolds Tobacco Company generated from Alaska?
Number 0202
MR. SMITH replied he did not know. He would find out and get back
to him.
Number 0209
REPRESENTATIVE BERKOWITZ asked Mr. Smith how much revenue the RJ
Reynolds Tobacco Company expected to loose from the implementation
of the tobacco tax in Alaska?
Number 0218
MR. SMITH replied he could not give a specific answer to
Representative Berkowitz's question.
MR. SMITH asked the question, "Why would manufacturers care if
there's smuggling between states among Indians?" It was all one
cigarette market to the manufacture. He explained a manufacture
did not like to see smuggling and organized crime because business
was disrupted, and it did not want to deal with illegal activity.
Furthermore, the manufacturers were concerned about drivers of the
products being hit upon. An 18-wheeler held $2.5 million worth of
cigarettes. That 18-wheeler could be hijacked and the
manufacturers were concerned about potential violence against the
drivers. Lastly, the manufacturers were concerned about the youth
issue. He said, "Every time a youth is seen smoking a cigarette in
this country, it is the manufacturers who are blamed for it." A
tax increase would definitely put more cigarettes into the hands of
kids because the access would be greater and it would not require
age identification. He cited in 1994 Canada lowered its taxes
because of the huge problem of smuggling. He cited one-third of
all the cigarettes were being smuggled. As a result of the
decrease in the tax, smuggling was wiped out, and the health
minister, Diane Merlou (ph), stated that by lowering the tax it
would actually reduce the consumption among the youth. He cited
that statement was made in the MacLean's magazine, dated February
21, 1994. He concluded, the raising of a tax did not discourage
consumption, it only encouraged a different buying pattern among
the consumers.
Number 0333
REPRESENTATIVE ELTON stated by using the logic of Mr. Smith, "We
can lower the crime of smuggling by legalizing marijuana too."
Number 0339
MR. SMITH replied that was an issue he knew nothing about.
Number 0363
DAVID L. WILLIAMS was the next person to testify in Juneau. He
read the following statement into the record:
"I am here to speak against the tobacco tax.
"Using taxation powers as a tool of government to accomplish ends
that are essentially moral in origin is a mistake. If we continue
to use government as a substitute for the moral teachings of
parents, churches, and schools, how can we realistically expect
that our Republican philosophy, that seeks to reduce government
intervention in our lives, can be attained? We can't, of course.
"And what then would be the result of the failure of elected
Republicans to live up to their publicly stated philosophy, and
their promises, their fiscal plan without new taxes?
"The evidence is clearly understood by many civil libertarians and
becoming more clear to the general public; decades of incremental
increase of administrative control over the population is causing
a significant breakdown of respect for our government and
consequently, for our country.
"Where once resided pride and love and trust, now beats suspicion
and disbelief, and distrust.
"We have here a circumstance where special interests are again
attempting to rent government in the pursuit of their goal, the
crafting of a tax on the misguided premise of protecting youth from
self-imposed harm -legislative intrusion into an area of individual
rights and responsibilities.
"Because we use taxes and laws to protect society against criminal
transgressions does not mean that government has the duty to
protect the individual from transgressions against himself, for it
does not.
"The vast quantity of scientific information collected on smoking
is done by private institutions and organizations that may not
always have the best interest of the American people at heart, or
may overlook those interests in favor of greater funding
opportunities, and the pursuit of their own specialized goals.
"This use of science to accomplish political ends is corrupting our
mighty scientific institutions and organizations. When governments
accept those suspect results that is cause for alarm amongst the
rest of us.
"We have reached the stage where Science prevaricates in the
pursuit of special interest goals, and the general populace, long
suspecting this, no longer believes everything science says.
Trust, once held sacred of science, now lays at the feet of an
industry engaged in open warfare against the individual rights of
the citizen.
"Certainly smoking is harmful, to some degree, differing from
person to person, and statistically, from country to country. But
people also die of overeating, and drinking, and lack of exercise.
Are these the next Moral Imperatives to drive our tax code?
"Once the role of government has been firmly established in
regulating the personal smoking behavior of its citizens, the next
easy step is to begin regulating other forms of personal behavior,
deemed offensive to the majority. Soon, books, movies, videos,
guns, deemed offensive, will be banned, as well.
"Is this the precedent you wish to set for future legislatures, for
future Republicans? That the noblest deed done in 1997 was to
increase a tax by 345% for people's own good, so that a handful of
youth who flagrantly violate the law each time they smoke a
cigarette, will no longer smoke?
"It seems to me that the Legislature is charged with upholding the
founding principles of our democracy, that of a limited government
doing for the people that which the people cannot do for
themselves, and nothing more.
"Thank you for your time and attention."
Number 0529
ROSIE T. SLOTNICK was the next person to testify in Juneau. She
stated the adults and law makers had already decided that children
under the age of 19 could not decide if they wanted to smoke or
not. The $1 tobacco tax would truly be a preventative measure
because it would target a group that had little money-children. It
also would help sever the link between smoking parents and smoking
children. She explained many of her acquaintances got their
cigarettes from their parents and the tax would render it too
expensive for parents to continue to look the other way.
Number 0579
REPRESENTATIVE VEZEY asked Ms. Slotnick if she had ever been around
other illegal drugs in her peer group?
Number 0607
MS. SLOTNICK replied the one illegal drug that she had been around
the most was cigarettes. She had not been around any hard drugs or
marijuana, but "cigarettes were everywhere, she declared.
Number 0622
REPRESENTATIVE VEZEY asked Ms. Slotnick if she had been exposed in
her peer group to the use of marijuana?
Number 0629
MS. SLOTNICK replied, "Maybe." But, she would not notice. She did
not know a lot about marijuana.
Number 0633
REPRESENTATIVE VEZEY asked Ms. Slotnick if she was in a position to
comment on what was the price of a marijuana cigarette?
MS. SLOTNICK repled, "No, I wouldn't."
Number 0650
HANNAH SLOTNICK was the next person to testify in Juneau. She said
she thought she represented a large part of her generation. She
explained she walked to school everyday and saw people smoking all
around her. They either bought or borrowed their cigarettes. She
believed the tobacco tax would greatly reduce the number that
started smoking. Her peers could not see that it was ruining their
health. She reiterated the tax would give them a reason to not
smoke and a reason to never start to smoke. This tax would benefit
her whole entire generation.
Number 0698
CHAIR JAMES asked Ms. Slotnick why she did not smoke?
Number 0717
MS. SLOTNICK replied she was a member of the Teens Against Tobacco
Use organization. The organization taught elementary school
children about the dangers of smoking. Her mother was also a
public health nurse who taught her about the dangers of smoking.
She also knew about the long-run effects of smoking.
Number 0742
REPRESENTATIVE ELTON pointed out to the committee members that
written testimony was also available from Ms. Slotnick.
Number 0758
GEN GAYNE-HAWES was the next person to testify in Juneau. She
announced she was a student at Juneau Douglas High School. She
explained everyday at school she felt the presence of tobacco. It
was mentioned, smelled and seen. This fact was ironic, she said,
because teenage suicide made the Time magazine and was the topic of
conversation for days. But, whenever teenagers smoked, "We have to
fight tooth and nail to pass the tax that might stop them." She
declared her support for the tobacco tax. Smoking was a form of
suicide. It was a self destructive behavior that led to death, and
its many victims started when they were young. Each day 3,000 kids
smoked their first cigarette. Each year tobacco killed more people
then AIDS, alcohol, fires, murder, heroin, car accidents, and
suicide combined. She did not want this to happen, "And, I don't
think you do either," she said. The cycle of addiction began with
teenagers being tempted. Kids start to smoke not adults.
Estimated indicated that this tax would reduce teen smoking by 32
percent. It was not a be all or end all solution, but it was a
step that needed to be taken for everyone that was addicted and for
everyone who might be addicted in the future. We need a road
block. She asked the committee members to support the tobacco tax.
Number 0848
CHAIR JAMES said she had heard Ms. Gayne-Hawes last year testify
and was very impressed.
Number 0876
LAEL HARRISON was the next person to testify in Juneau. She was
representing the majority of the kids at the Juneau Douglas High
School who had to see people smoking and chewing tobacco.
Yesterday, she explained she conducted a survey among her peers.
Invariably they said they supported the tax. At the end of the day
she collected 44 signatures in favor of the tobacco tax and 1
against it. She knew that if she had organized herself better she
would have gotten more signatures. Nevertheless, this showed the
support of the high school. It would show that the legislators
cared about their health from smoking. It would make them think
twice. It would make them see that they would get into financial
trouble. This would not just affect the kids at the high school,
it would affect people of all ages. There were a lot of adults
that would have to cut down on the amount that they smoked due to
financial reasons. This would probably keep them alive another
five years to ten years. She stated her support of the tobacco
tax.
Number 1016
DAVID JOB was the next person to testify in Juneau. He was a
practicing respiratory therapist and volunteered with the Teens
Against Tobacco Use in the high school. The prior teen that
testified just about said it all. There was no doubt in his mind
that a $1 additional tax was needed. It did encourage all ages to
quit smoking, but the biggest affect would be on the younger
people. Studies showed that money talked and the teens would walk
away from smoking. It would also make alternatives to smoking such
as nicotine patches seem more affordable. It would be cheaper to
stop smoking. In his profession he treated the effects of smoking.
He treated lung cancer, chronic bronchitis, and emphysema. He also
lived near the high school, and "I shudder as I see the next
generation of smokers starting down tobacco road." "Please make
sure that road is very expensive to go down," he asked.
Number 1092
REPRESENTATIVE VEZEY asked Mr. Job what percentage of his patients
were smokers?
Number 1112
MR. JOB replied he dealt with a lot of different types of patients.
Almost all of his patients that repeatedly returned with pulmonary
problems were smokers. He did not know a specific number, but he
stated the majority of his patients were smokers.
Number 1151
REPRESENTATIVE VEZEY asked Mr. Job if he saw different patterns
between cigar, pipe and cigarette smokers in his profession?
Number 1166
MR. JOB replied he saw patterns, but as a respiratory therapist, he
would see the ones that inhaled the products. Therefore, he mostly
saw the effects from cigarette smokers.
Number 1184
REPRESENTATIVE DYSON asked Mr. Job if he had a significant
population of patients that had respiratory problems from second
hand smoke or so called environmental smoke?
Number 1196
MR. JOB replied anyone that had been exposed to cigarette smoke
would have problems. Studies indicated that the effects were wide
spread.
Number 1227
REPRESENTATIVE DYSON asked Mr. Job if in his client population did
he have anyone with lung cancer of emphysema that was caused by
second hand smoke?
Number 1236
MR. JOB replied he had not seen anyone with emphysema from second
hand smoke. There were health consequences, however.
Number 1265
ROBERT DICKSON was the first person to testify via teleconference
in Anchorage. He commented all of the debate, discussion, and
testimony addressed cigarettes, it did not address cigars and
pipes. The bills called for a 100 percent tax on all cigars and
pipes. He asked the committee members to exclude these because the
health testimony did not apply or support cigar and pipe smoking
and teenagers did not use cigars or pipes. He was also concerned
that the tax would put a lot of cigar and pipe stores out of
business.
Number 1447
REPRESENTATIVE CON BUNDE explained information regarding the health
effects of cigar and pipe smoking was being prepared for
distribution now.
Number 1470
JENNIFER LOUDON was the next person to testify via teleconference
in Anchorage. She shared with the committee members a story of her
experience of a family member struggling with lung cancer. She
cited in 1993 over 1.9 million people were inflicted with lung
cancer and 13,000 people died as a result of a life time of
smoking. The vast majority of research supported that adults did
not start smoking, but teenagers did. Alaska must stop kids from
becoming addicted. "Spare Alaskans from suffering the kind of
painful death caused by tobacco which I witnessed, and please help
Alaskan families from having to watch their loved ones taken away
from them in a horrific manner," she stated.
Number 1631
PAUL BARRETT was the next person to testify via teleconference in
Fairbanks. He stated he was a conservative Republican and he
favored the tax. He asked, to those who challenge the efficacy of
the tobacco tax, why was the tobacco industry so opposed to the tax
if it would not reduce consumption? He stated, to those that
believed the tax would target a small group of Alaskans, he
believed the tax was a self-exempt tax, and everyone had the right
to exempt himself. Furthermore, at the current level of medical
cost for every $1 the state received in tax revenue, $7 was spent
on tobacco health care related costs. In Alaska the direct medical
cost was more than $45 million a year compared to the total cost of
the Alaskan economy at more than $127 million. Moreover, non-
smokers paid three-fourths of all public expenditures for smoking
related problems. It was time to pass the tobacco tax. He
declared, "It will work, it's the right thing to do, it's the smart
thing to do, and it's the democratic thing to do."
Number 1772
CLAUDIA ANDERSEN was the next person to testify via teleconference
in Fairbanks. She announced she was a registered nurse and the
mother of two children. She believed the tobacco tax was the
single most important variable in deterring the purchase of
cigarettes by teenagers. She felt that adults did not start
smoking, but that teenagers did. She was exposed to every type of
cancer due to her work. It was rare that she did not take a
history of a patient that was not a smoker. She reiterated smoking
cigarettes was deadly and a tobacco tax would save lives.
Number 1879
LOIS IRVIN was the next person to testify via teleconference in
Homer. She thanked the committee members for providing a forum for
expression. She declared her support of the tobacco tax. She
agreed with the previous testimony, especially that from the school
children.
Number 1935
DANIEL BOONE was the next person to testify via teleconference in
Homer. He thanked the committee members for allowing him to speak
this morning. He asked each of the members to support the tobacco
tax increase. The diseases linked to tobacco use caused Alaskans
millions of dollars each year in medical expenses, reduced
productivity and lost time on the job. He also mentioned the pain
and suffering this caused to family and friends. Recent
statistical analysis indicated 18,000 young people would become
smokers and die of tobacco related illnesses-cancer, heart disease
or stroke. Most smokers started when they were teenagers. It was
estimated that the tobacco tax would spare 5,700 young Alaskans
from this tragedy. This was only one part of the answer, however.
He also believed in a strict enforcement in the statute that
prohibited the purchase of tobacco products by those under the age
of 19. Everything must be done to keep tobacco products out of the
hands of young people. He shared with the committee members the
story surrounding the death of his brother who was a smoker. He
asked the committee members again to support the tax. It was not
the only answer, but it was an important first step.
Number 2102
JUDY DOWNS was the next person to testify via teleconference in
Kenai. She announced she worked with the Kenai Peninsula Borough
School District as a safe and drug free school specialist. The
majority of Alaskan smokers began smoking between the ages of 10
years and 20 years old. The Kenai Peninsula School Borough
District administered a youth-risk behavior survey in 1995. The
survey indicated that among the high school student, 33 percent
were current cigarette users, and 20 percent were frequent users.
Among the middle school students 24 percent were current cigarette
users, and 7 percent were frequent cigarette users. Furthermore,
she was very active with various health associations in Kenai and
had witnessed death and pain as a result of tobacco use. It would
be irresponsible not to pass the $1 per pack tax. She would
support and even higher tax because the debate really boiled down
to profits for the tobacco company or saving lives. She was more
interested in saving lives in her community.
Number 2293
CHAIR JAMES asked Ms. Downs if she saw the education program from
the state of Michigan on television last night?
MS. DOWNS replied, "No." Last night she was in the process of
writing a grant for alcohol and tobacco education.
CHAIR JAMES said the program was excellent. The programs started
with young children and taught them how to not get involved with
tobacco, alcohol and drugs. The program was reducing the use of
tobacco, alcohol and drugs by 50 percent and it only cost $8,000
per year.
MS. DOWNS asked Chair James what network the program was on?
CHAIR JAMES replied she could not remember.
MS. DOWNS stated Chair James brought up a very good point that the
tobacco tax was only one small component of this issue.
TAPE 97-5, SIDE A
Number 0035
BARBARA WATER was the next person to testify via teleconference in
Kenai. She did not smoke but had spent 43 out of 47 years living
with smokers. She shared with the committee members how her
husband started smoking. The cigarettes were available to him
whenever he wanted them. A tax would not have deterred him because
he was hooked and he needed a cigarette, she stated. Her daughter
now smoked and was hooked. "There is probably no tax too high that
would stop her at this point," she declared. She would quit when
she had a need to. The cost would not be that need. Therefore, no
tax would stop a youth from smoking. The teens she knew had more
spending money than she did because they did not have any bills.
They could spend their money how they chose to. The age law
preventing teens from smoking did not deter them from obtaining
tobacco products whenever they wanted. She asked the committee
members to rethink their position on this matter. She did not see
how a tax would deter a teen from smoking.
Number 0228
DEBORAH WATTS, Executive Director, Alaskans for Drug Free Youth,
was the next person to testify via teleconference in Ketchikan.
The Alaskans for a Drug Free Youth supported the tobacco tax
increase. At this point in time approximately 25 percent of school
age youth had tried or were currently using tobacco products. It
was a known fact that an increase in the tobacco tax indeed did
decrease the use of tobacco. The tobacco tax could possibly save
up to 25 percent of our youths. The teens that she talked to at
the high school supported the tax as well. She was also organizing
a teen counselling tobacco workshop and within the first two hours
18 kids were willing to volunteer. Therefore, the Alaskans for a
Drug Free Youth felt that the adults should follow through with
what the majority of the children wanted.
Number 0344
MARSHA MAROELLI, Assistant Project Director, Bering Strait
Community Partnership, was the next person to testify via
teleconference in Nome. She explained last year the partnership
conducted a survey with the University of Alaska, Anchorage and the
Department of Sociology. The adult survey indicated that the mean
percentage of adults smoking was 55 percent in the region, and some
villages reported the mean as high as 83 percent. The youth survey
indicated about two-thirds of the youth had tried cigarettes. It
was also found that many of the young smokers had someone else
purchase cigarettes for them. In many cases the purchaser charged
$1 per pack to buy them for the youth. Therefore, the tax increase
plus the charge would increase the price of a package to $4.50.
She also explained that it was acceptable for many of the youths to
borrow cigarettes from other smokers until they were told to buy
their own. The tobacco tax would price cigarettes out of the reach
of many young smokers. She agreed with prior testimony that
indicated this was only one component in combating this epidemic.
She also agreed that prevention, secession efforts and enforcement
were other components. She reiterated a tax increase would create
an impact, whereas, a tax reduction would reduce the impact.
Number 0499
DUFFY HALLIDAY was the next person to testify via teleconference in
Nome. He worked as a health educator, but would like to testify
today from a personal perspective. He supported the tobacco tax
because he believed it would discourage the youth from smoking and
enforce the adult smokers to seriously consider if they wanted to
continue to smoke. He shared with the committee members the death
of his mother from cancer of the throat from smoking. That was why
he supported the tobacco tax on a personal level. He hoped that
the tobacco taxes could be directed or indirectly applied to the
health related problems associated with smoking. He believed the
proposed tax was a win-win situation by deterring the youth from
smoking and by providing more money for the state.
Number 0662
WILL SWAGEL was the next person to testify via teleconference in
Sitka. Mr. Swagel was a smoker and a solid citizen. However, he
declared, for the first time in his 15 years of living in Alaska,
he was ashamed to say he was an Alaskan due to the tobacco tax. He
wondered if anywhere else if there had ever been a 344 percent
increase in the tax raised on anything. He said, "I think not.
Not since the Boston Tea Party." Why? he asked. "Because you are
willing to jump on the band wagon of popular opinion and impose a
discriminatory tax on an unpopular group," he answered. He further
wondered if the legislature would do this again with the issues of
guns, furs, or alcohol for example. They were unpopular issues as
well. The studies that indicated a tax would decrease the use of
tobacco products among the youth, he wondered if those studies had
been conducted in the United States where the possession of tobacco
was already illegal. "I think not," he said. He discovered a
package of cigarettes went for $5 on the street. The tobacco tax
would encourage smuggling. He did not support the testimony that
smuggling would not be an issue because Alaska only shared a border
with Canada. He stated, "That's why illegal drugs never make it to
Alaska, right?" That was not what made him ashamed of this tax,
what made him ashamed was the meanness of this proposal. He moved
to Alaska because it promised a freedom of frontier away from the
social engineering prevalent in the lower 48 states. He moved to
Alaska because the state's constitution guaranteed the right of the
individual to make choices for himself without undue governmental
interference. He stated he understood the efforts behind the tax.
but, "if you want to be fair, double the tax, and use that money to
educate smokers." A 344 percent tax increase on anything
represented tyranny. Governor Knowles portrayed this tax as the
straw to break Joe Camel's back. The only back that this law would
break, he declared, was his along with the backs of other law
abiding Alaskans. This tax allowed Governor Knowles and Joe Camel
to walk hand in hand to the bank.
Number 0862
REX GARVER was the next person to testify via teleconference in
Sitka. He came from a long line of cigar, cigarette and pipe
smokers. He worked with the youth in Sitka. He firmly believed
that the tobacco industry targeted people under the age of 20 to
begin using tobacco products. The arguments from individuals
opposing the tax to keep government small generally worked for the
tobacco industry or wanted to continue to feed their addiction at
a lower cost. He explained he worked with the youth in Sitka that
had already been busted for using tobacco products. They were all
under the age of 19 and the majority were already addicted. He was
passionate about this subject and hoped that the committee members
were as well.
Number 0969
KATHERINE LIMON, Member, Juneau Tobacco Prevention Network, was the
next person to testify in Juneau. She worked with the at-risk
teenagers at the high school. The majority of them were highly
addicted to cigarette smoking and a majority of them would die as
a result of tobacco use. She shared with the committee members
that her aunt and grandmother died to cancer from smoking. Her
grandfather was also in the early stages of emphysema. She also
stated her younger sister was a smoker.
Number 1027
CHAIR JAMES asked Ms. Limon why she did not smoke?
Number 1032
MS. LIMON replied the main reason was watching her aunt die in the
hospital and seeing how it affected the whole family. She watched
her deteriorate everyday and she continued to smoke up until the
day she died, practically. She also knew what it could do to a
person. She was lucky to be a strong enough person to decide not
to smoke, whereas, her sister was not.
Number 1054
CHAIR JAMES asked Ms. Limon if she was exposed to cigarettes? Were
her friends smokers? Did she have the opportunity to start smoking
also?
Number 1060
MS. LIMON replied, "No." Her mother was a smoker then quit. Her
father did not smoke. Her siblings had all smoked at one point.
She believed it was too much of a destructive behavior.
CHAIR JAMES gave her congratulations to Ms. Limon and thanked her
for testifying.
Number 1090
BANARSI LAL, Director-Alcohol and Drug Abuse Program, Fairbanks
Native Association Inc., was the next person to testify in Juneau.
He declared his support of the bills that had been filed addressing
this issue. He cited HB 1, HB 52, HB 65, SB 13 and SB 61. He was
heartened by the fact that there was bi-partisan support. He
referred to and summarized the findings in an analysis by the
Department of Health and Social Services. He reiterated he
supported all the bills that asked for a tax increase. He also
supported the effort to put a certain percentage of the funds
towards the schools to support construction. In Fairbanks there
was a need for more school space. Furthermore, he believed that
when the cost went up substantially and it started to impact a
person's limited resources, the demand had to go down. He cited
the country of India where there was a tremendous black market for
essential commodities. When the people could not afford a product
they found other means to meet their needs. It became a question
of what a person could afford. Therefore, the demand would go down
when a person could not afford it due to a tax increase. He also
supported a means to find a way to put the money generated into
education and prevention. He was concerned that the kids would try
to switch over to another form of addiction. Therefore, prevention
education was needed. He explained he also served as a member of
the advisory board on alcohol and drug abuse. The board supported
the efforts last year and this year as well. The board would meet
again in early February and he hoped that they were going to
forward another strong endorsement.
Number 1405
KATHERINE MCCONKEY was the next person to testify via
teleconference in Glennallen. In the Glennallen area kids tried
tobacco as young as six years of age. She conducted a freedom from
smoking class of which contained five students at 15 years of age
that had the desire to quit, but were addicted to chewing tobacco.
The adults were also buying cigarettes for the kids here in
Glennallen. There were several cases of cancer as a result of
tobacco in the area as well. She strongly supported the tobacco
tax and stated she would like to see it applied to the health care
of those addicted.
Number 1497
JAN MARQUISS was the next person to testify via teleconference in
Anchorage. He was a long time resident of Alaska. He was
president of a company that distributed candy and tobacco products
based in Anchorage. He agreed it was time to end the illegal use
of tobacco by minors. However, he believed that there were other
ways to accomplish this other than by raising the price. He cited
the increase alone for one month would be $185,000. He mentioned
the proposed tobacco tax increases in Anchorage and Fairbanks and
commented nobody had mentioned them today. It was possible to
avoid the borough taxes. It was being done right now for either
resale or reuse. Therefore, another tax would open the doors for
users to find other means of obtaining cigarettes. He declared his
concerns of the seriousness of the effects of smuggling and tax
evasion on his business and his customers.
Number 1663
PAT SENNER, Representative, Alaska Nurses Association, was the next
person to testify via teleconference in Anchorage. The association
commended Representatives James and Bunde for introducing
legislation to increase the tobacco tax. The association in
particular favored an increase on cigarettes and chewing tobacco.
She was often asked about nurses that were also smokers, and how
they could continue to smoke since they worked with people
suffering from the adverse consequences. She explained they either
started in high school, in the military or in nursers training when
it was discovered that they got more breaks. This clearly showed
the illogical side of an addiction. The association was committed
to working with other organizations to prevent smokers from
obtaining cigarettes from other sources such as the military bases.
She reiterated, in conclusion, the association supported HB 1 and
HB 52.
Number 1760
BILL BOUWENS was the next person to testify via teleconference in
Anchorage. He was an Alaskan Native and a long-time resident of
Anchorage. He reminded the legislators that the government did
have the right to regulate health and safety issues. He was by
profession a tobacco educator at the Alaska Native Medical Center.
Therefore, he saw the tail end of people with addictions. It was
not the addiction to nicotine that killed smokers, it was the other
by-products, such as, tar and carbon monoxide. He was also
concerned about the effects of second hand smoke on the Alaskan
Native children. In life, he said, there were not very many
choices, but when it came to tobacco there were two choices-life or
health. He urged the legislature to pass the $1 tobacco tax not to
punish adult smokers, but to simply prevent children from starting
to smoke.
Number 1863
VEVA BECKER was the next person to testify via teleconference in
Fairbanks. She was a tobacco educator for the American Cancer
Society. She supported and promoted the $1 tax. The average age
to try smoking was 13 of which many became daily smokers by the age
of 14. She would rather see that money spent on cigarettes go
towards clothes, for example. She was also concerned about the
serious problems of their underdeveloped lungs creating lung cancer
and other respiratory problems. The tobacco industry spent per
year $6 billion on advertizing. She stated, "They must promote to
keep this business going. They need kids to smoke." She believed
the tobacco tax could also help educate. There were more people
signing up for programs to help them to stop smoking. Nicotine was
the hardest drug to overcome. It was important to help the parents
stop smoking to help the children. This was a serious problem in
the Interior of Alaska. She felt the tobacco tax would help the
children.
Number 2034
MARGARET WILSON was the next person to testify via teleconference
in Fairbanks. She was a mother and a registered nurse and worked
for the Tanana Chiefs Conference Inc.. A presentation was recently
given in a village to 5th graders of which several dumped their
cigarettes into the trash can afterwards. She asked, "Did I think
they quit? No, these young children are addicted," she replied.
Statistics showed that 41 percent of Native boys and 32 percent of
Native girls used spitting or chewing tobacco weekly. This created
a higher rate of cancer in the Alaskan Natives, especially the
women. She also stated the younger a person started to quit, the
harder it was to quit. She supported the $1 tax on tobacco because
it had been shown that it would deter young people from purchasing
tobacco products.
Number 2117
KIM GREER was the next person to testify via teleconference in
Homer. She was a health care professional and taught tobacco
education in the schools. There were many that supported this tax,
but could not be here because they worked during these hours, she
stated. She urged the committee members to look at the evidence of
the Center for Disease Control (CDC) and from C. Everette Koop,
former surgeon general, and not to the tobacco industry. She
shared with the committee members her father's struggle with
emphysema. She said she felt very small against the tobacco
industry with "all their money and power and influence and
tactics." She reminded the committee members that this tax was
about the children, their health, and their future. Research
indicated that when the price went up, consumption went down. It
was pure and simple. She asked that the legislature be proactive
by saving lives and preventing suffering. She urged the committee
members to move this bill forward. She trusted that they would
find a productive place to put it. This could become an acceptable
reason for the young kids to say no to smoking.
Number 2222
MICKEY PICO was the next person to testify in Juneau. He urged the
committee members to pass the $1 cigarette tax. He started to
smoke when he was 17 years old. He paid only 23 cents per package
at that time. He felt certain that if the price had been higher he
would not have started smoking. He would have spent his money on
other things. He did not feel the issue here was bootlegging and
smuggling, but rather protecting young people from smoking. He
stated Alaska would be in the forefront and other states would soon
follow. He wanted Alaska to be the leader on this issue.
Number 2280
BONNIE JACK was the next person to testify via teleconference in
Anchorage. She called herself a political activist and she
strongly supported an increase in the tobacco tax. She was also a
mother and a grandmother, but more importantly she was the daughter
of a mother who died of emphysema from smoking. Her mother was a
registered nurse and a very bright woman, but she could never shake
the addiction. She urged the committee members to tax this killer
and to help prevent young people from starting this vile habit.
She appreciated the efforts of Representative James and Bunde. The
voters of Alaska strongly supported the tobacco tax even if it was
not targeted. She strongly believed in a cost-causer, cost-payer.
Therefore, increase the tax on the causers that had increased the
cost of public health care. She also suggested looking into
increasing the dollar penalty of an illegal possession of tobacco
products by a teen. She reiterated she believed the tobacco tax
would prevent a few people from beginning to smoke or even continue
to smoke.
Number 2396
BOYD MCFAIL was the next person to testify via teleconference in
Anchorage. He stated it was interesting to see that all the other
pieces of legislation, except HB 1, tried to dedicate the taxes.
Yet, they all contained a fall-back clause that brought them back
to the same wording as in HB 1. He also said the only language
that remained identical to last years bills was the 100 percent
excise tax on cigars and cigarettes and other tobacco products. He
listened to the testimony on Tuesday, January 28, 1997, of which
the Department of Health and Social Services could not come up with
facts on these matters. Other testimony on Tuesday and today
indicated that any opposition from a person to the tobacco tax was
considered a pawn of the tobacco industry. He stated most of the
testimony in support of the tax came from the health agencies that
were completely or partially funded by the tax payer's money. He
had lost two hours of pay to come here to testify while the other
testifiers from the health agencies were on company time.
TAPE 97-5, SIDE B
Number 0001
MR. MCFAIL continued by asking the committee members why the tax
was also being raised on cigar and pipe tobacco when the increase
was intended to deter teenage smokers? He also asked why they were
raising taxes on products that were already illegal for those under
the age of 19? He lastly commented HB 79 would be a much better
vehicle to accomplish this.
Number 0038
LAURA SARCONE was the next person to testify via teleconference in
Anchorage. She was a certified mid wife. She supported the $1
tobacco tax increase. She was particularly opposed to smoking
during pregnancy. This tax could prevent saving in the health care
dollars in other ways other than cancer prevention. Many studies
had linked low birth rate, prematurity and perinatal mortality from
maternal cigarette use during pregnancy. The single cost of a
premature and low birth rate baby could be as much as $100,000.
She reiterated she supported the $1 tobacco tax as a deterrent for
all teens, but mostly as a deterrent to pregnant teens.
Number 0103
RICHARD H. RUSSELL was the next person to testify via
teleconference in Bethel. He was affiliated with the American
Heart Association, the American Cancer Society and worked as a
correctional officer with the state. He stated he supported the
tobacco tax. It was known that cancer was a serious health problem
among the Alaskan Natives whereas in the past it was not. And, the
primary reason was related to the use of tobacco products. He
referred to earlier testimony of the existing age limit law and
rules of local school districts and mentioned that these laws were
unenforceable. An increase in tobacco tax had shown that it was a
very effective tool to limit its use among the youth. Right now
Alaska was at the low end of the spectrum across the country and
the world in terms of excise taxes. Alaska now had the opportunity
to become the leader in the country. In conclusion, over $100
million dollars had been spent in the last eight years by the
tobacco industry opposing the tobacco tax. "They know it works,"
he stated.
Number 0204
KAY JONES was the next person to testify via teleconference in
Homer. She grew up in a smoking household and watched her mother
die of lung cancer. She shared with the committee members the lose
of her cousins due to lung cancer. She saw the children around
Homer smoke and she saw people buy cigarettes for them. As long as
the adults continued to buy cigarettes and provided a venue for
them to get a hold of tobacco, they would continue to smoke. These
children were addicted, and tobacco was the one thing that no one
came off of. "You can kick cocaine, you can kick marijuana, you
can kick heroin, but you can't kick tobacco. It's a deadly
poison," she declared. There was nothing that she would not do to
stop the children. She urged the committee members to support the
tobacco tax because of the devastation it caused at all age levels.
The nation paid a high cost for the effects of smoking, and Alaska
needed to take a stand now to show they were a part of this. Maybe
the rest of the nations would follow.
Number 0320
MARIANNA WOODWARD, President, Tanana Valley Clinic, was the next
person to testify via teleconference in Fairbanks. She explained
the clinic was a group of 20 private practicing physicians in
Fairbanks. The clinic supported the tobacco tax and sent a
resolution to the Senate last year stating its support of the tax.
As a pediatrician she saw the ill effects of tobacco use in
children. The statistics indicated that adult smokers started when
they were young. In Alaska 84 percent of the adult current smokers
started when they were teenagers. Therefore, by reducing access by
teens, it would reduce the number of adult smokers and the health
consequences of smoking. The American Academy of Pediatrics found
that tobacco had a greater impact on health then either alcohol or
hard drugs. She called this a very serious problem and needed to
be addressed from many different fronts. In her profession she
reiterated she saw the effects of smoking everyday. She cited
premature babies, ear infections as examples. In response to
earlier testimony she stated that there was no reason accept that
cigars would not also cause a significant problem to children.
Number 0466
CHERYL KILGORE was the next person to testify via teleconference in
Fairbanks. She thanked Representatives James and Bunde for
sponsoring these measures. She called the tax an effective way to
reduce tobacco use in the youth. The tax would restrict the access
and prevent the initiation of smoking. Thank you for your
leadership and for caring for the future health and well being of
our children. This was only one measure....(indisc.--technical
problems).
Number 0517
LARRY GRAHAM, Executive Director, Alaska Association of Secondary
School Principals, was the next person to testify via
teleconference in Anchorage. At the annual business meeting last
October, the membership passed a resolution calling for a
substantial increase in the tobacco tax in Alaska. The resolution
did not address the revenues that the tax would raise. The
resolution was passed because the association believed that the
legislation would help decrease the number of students that smoked
and improve the health and learning of the students. There was a
direct correlation between those that smoked and the tardiness and
truancy of the students. This also affected the time spent in the
classroom and what they learned. Many of the principals believe
that kids were starting to smoke at an earlier age then ever before
and most were addicted. He reiterated the tax would prevent the
young from starting to smoke.
Number 0656
JEAN MURRAY was the next person to testify via teleconference in
Anchorage. She lived in Anderson. She thanked Representative
James for bringing forth this issue again this year. She supported
both bills. The issue of smuggling was overestimated she believed
because many involved were small businessmen and not enough credit
was given to them. Furthermore, positive addictions such as gum,
running shoes and skis were ways to divert the attention of
teenagers.
Number 0760
SYLVIA SCOTT was the next person to testify via teleconference in
Anchorage. She was a mother and a grandmother. She would be 100
percent for the tax if the money would go to the children and to
the schools. "You know and I know what it's going for," she
stated. It would go to other projects. She was tired of the
children being used and abused to enhance other projects. She
believed the tax would create more crime and the correctional
facilities were already full. Another tax would be needed to build
facilities to house these young people. The parents needed to
teach their children that the use of tobacco was wrong, not the
government or the state.
Number 0854
RICK SCOTT was the next person to testify via teleconference in
Anchorage. He felt that the proposed tax hike was yet another way
to chip away at our freedoms as an American. Our forefathers left
Europe to escape excessive taxation imposed on them, now everywhere
we look we were being taxed. We have become just like the
communist nations. The Governor felt that the tax hike would deter
the youth from buying cigarettes. "This whole young generation
that gladly spends $125 on a pair of athletic shoes, " he stated.
The teenagers usually had more money then their parents. "Give our
kids back to the parents. Let us work with them. You stay out of
it. I think we'll get along a lot better."
Number 0950
DAN LEVINSON was the next person to testify via teleconference in
Homer. His testimony was based on two premises-the reduction of
tobacco use by the tax increase and the state took for itself the
power to protect the heath and welfare of its citizens. He
supported the tobacco tax. "If you can't pass that tax bill, then
I challenge you to come up with something that will work," he
declared. Please do not maintain the status quo.
Number 1017
DARLEEN BELTZ was the next person to testify via teleconference in
Anchorage. She was a long time Alaskan resident and of Tlingit
ancestry. She came from the thunderbird house. She recently lost
a person she knew to tobacco. She wished that the tobacco industry
was near her when he died. People had to pay for his care which
lasted for two years. She asked, "Whose going to pay now?" She
wondered how this monster became so attractive. She asked was it
through movies and sports? In conclusion, she stated she supported
the $1 tax. "Keep it high," she said. She did not care where the
money went to.
Number 1175
BRUCE MCCURTAIN was the next person to testify via teleconference
in Anchorage. He addressed the language in the bills. He first
thanked the legislature for trying to address the problem with
children and tobacco. There must be a better way to address this
problem than raising the tax. He asked for legislation that
provided for strong penalties for retailers that sold tobacco
products to minors and for youths that used tobacco products. He
also asked for legislation that would allow the police and troopers
to use minors to find unethical retailers. He recognized HB 79 and
appreciated the bill. He called on the same measures that were
used to address the problem with youth and alcohol. He could not
support the increase of the excise tax on cigars from 25 percent to
100 percent. He could not see how that would protect the youth
when the price of a cigarette only increased 5 cents and the price
of a cigar increased $5. This large blanket of an increase was too
wide.
Number 1292
JOANNE LOVITZ-EDMISTON was the next person to testify via
teleconference in Anchorage. She was a 17 year resident and did
not support the legislation. "Lets cut to the chase shall we.
This issue is not really about teen smoking, is it?," she asked.
She called it a revenue enhancer disguised as "do gooding." If the
state of Alaska was truly concerned it would insist upon the proper
enforcement of current laws. Yet, this would bog down the police.
It would be easier to tax the people, of which the Republican lead
majority, said it would not "throw down on our backs," and throw
the money in the wrong direction. What was wrong with asking for
identification? she asked. The state was not serious about teenage
smoking, she reiterated. "I am sick to death of all the false
paternalism and `mommism' from the state government," she stated.
She would not allow any one else to think for her. If HB 1 or HB
52 were passed, she would purchase her cigarettes via the mail or
from the Native organizations.
Number 1459
CODY MITCHELL was the next person to testify via teleconference in
Anchorage. He was a manager of a large retail company in
Anchorage. He attested that other purchasing avenues such as
smuggling would increase as a result of an increase in the tobacco
tax. He agreed that smoking killed and something needed to be
done. However, it would not happen through raising taxes. He knew
of customers already planning ways to get their cigarettes cheaper.
He challenged the legislators to find a happy medium to appease
both sides. The people were tired of being taxed.
Number 1596
SUSAN FISCHETT was the next person to testify via teleconference in
Anchorage. She was here to testify as a private citizen and not as
a state paid health employee. She strongly opposed the tobacco
tax. "It sounds like fear mongreling and scare tactics," she
stated. Young people were already protected by the law. The tax
would only lead to an increase in crime, stealing and black market
activity. It would not deter kids from using tobacco. "Why are we
so eager to tax our children, anyway," she wondered. Let's offer
an incentive for those that did not smoke, for example. The
tobacco tax would be used as a stepping stone to a state income tax
and more. The Anchorage School District was already planning to
tax its citizens more. The legislature should be committed to
reducing spending and not looking at ways to raise revenues and
spend more.
CHAIR JAMES announced the next meeting on HB 1 and HB 52 would be
Tuesday, February 4, 1997; listen only for the teleconference
network.
ADJOURNMENT
Number 1674
CHAIR JAMES adjourned the House State Affairs Standing Committee
meeting at 11:00 a.m.
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