Legislature(1993 - 1994)

1994-01-28 House Journal

Full Journal pdf

1994-01-28                     House Journal                      Page 2180
HB 413                                                                       
HOUSE BILL NO. 413 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
"An Act increasing excise taxes on cigarettes, tobacco products,              
and alcoholic beverages; and providing for an effective date."                 
was read the first time and referred to the Labor & Commerce, State            
Affairs and Finance Committees.                                                
The following fiscal note applies:                                             
Zero fiscal note, Dept. of Revenue, 1/28/94                                    
The Governor's transmittal letter, dated January 28, 1994, appears             
"Dear Speaker Barnes:                                                          
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am     
transmitting a bill to increase the excise tax rate on alcoholic beverages     
and cigarettes and other tobacco products.                                     
This bill is one of four relatively modest revenue proposals I am              
offering this session to help offset the large revenue shortfalls the state    
is facing in fiscal year 1995 and in the years to follow.  In addition to      
providing $15 million annually in increased revenues, enactment of this        
bill into law may help reduce the consumption of tobacco and alcohol,          
resulting in long-term public health benefits, increased public safety,        
and medical care cost savings.                                                 
Tobacco use is the number one cause of preventable death and disease           
in America, accounting for some 400,000 deaths per year. Alcohol is            
the number three cause of preventable death and disease at 100,000             
deaths per year.  The social costs of tobacco and alcohol in Alaska in         
terms of mortality and morbidity are staggering.  The most recent              
estimates made by the Department of Health and Social Services of the          

1994-01-28                     House Journal                      Page 2181
HB 413                                                                       
impact of smoking in Alaska concluded that 22 percent of deaths of             
persons 35 years of age and older in 1989 were attributable to                 
smoking.  During the same year, the direct health cost of smoking was          
estimated at $34.1 million, while indirect mortality and morbidity costs       
associated with smoking amounted to another $49.1 million.  Compare            
public health costs of this magnitude to fiscal year 93 tobacco products       
revenues of $16.9 million and it is apparent that taxes only recover a         
fraction of the social costs of consumption of tobacco products.               
Compared to other states, Alaska has especially large problems with            
alcohol and drug abuse, which also engender enormous social costs.             
According to a recent Department of Health and Social Services study,          
the direct social costs of alcohol and drug use in Alaska in 1993              
amounted to $238 million, while total economic costs reached $611              
million.  During the same year, alcoholic beverage excise tax revenue          
amounted to $12 million.  As with use of tobacco products, the alcohol         
drinking habits of younger consumers are highly sensitive to price             
increases and it is the 12 - 21 age segment of the population that this        
bill will benefit most.                                                        
The last increase in the Alaska tobacco products excise tax was in             
1989.  Inflation has since eroded much of the dampening effect that            
the increase had on consumption.  According to the National Cancer             
Institute, "to maintain the health effect of the tobacco excise tax, it        
must be increased regularly."  The excise tax on alcoholic beverages           
was last increased (by about 40 percent) in 1983. Following the                
increase in alcohol taxes, per capita consumption showed a profound            
decrease from about 4.1 gallons per year to a low of 3.3 gallons in            
1991.  Now it appears that per capita consumption is again on the rise.        
The Department of Health and Social Services sees increased alcoholic          
beverage taxes as an important strategy for achieving its Healthy              
Alaskans 2000 objective of reducing Alaska's per capita consumption            
rate to the national average level (currently 2.46 gallons per year) by        
the end of the decade.                                                         
The Department of Revenue estimates that the proposed increases in             
excise taxes in this bill will generate an additional $15 million in           
general fund revenue.                                                          

1994-01-28                     House Journal                      Page 2182
HB 413                                                                       
I think most legislators will agree that taxing the use of harmful             
substances like alcohol and tobacco to discourage consumption and              
recover social costs borne by the general public is one area of                
government regulation where state intervention in the marketplace can          
make a difference in the health and well being of its citizens.  I urge        
your support of this bill.                                                     
											Walter J. Hickel