Legislature(1993 - 1994)
1994-01-28 Senate Journal
Full Journal pdf1994-01-28 Senate Journal Page 2618 SB 269 SENATE BILL NO. 269 BY THE SENATE 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 and Commerce and Finance Committees. Fiscal note published today from Department of Revenue. Governor's transmittal letter dated January 28: Dear Mr. President: 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. 1994-01-28 Senate Journal Page 2619 SB 269 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 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 1994-01-28 Senate Journal Page 2620 SB 269 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. 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. Sincerely, /s/ Walter J. Hickel Governor