Legislature(2021 - 2022)ADAMS 519
04/29/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB45 | |
| SB9 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 45 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 9 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 45(FIN)
"An Act raising the minimum age to purchase, sell,
exchange, or possess tobacco, a product containing
nicotine, or an electronic smoking product; relating
to selling a tobacco product; relating to possession
of tobacco, electronic smoking products, or products
containing nicotine by a person under 21 years of age;
relating to the definition of 'nicotine'; relating to
transporting tobacco, a product containing nicotine,
or an electronic smoking product; relating to the
taxation of electronic smoking products; relating to
electronic smoking products; relating to the marketing
of electronic smoking products; relating to tobacco
products; and providing for an effective date."
1:31:57 PM
SENATOR GARY STEVENS, SPONSOR, introduced the bill that was
intended to prevent children from becoming addicted to
nicotine. He indicated that the tobacco industry had
recognized the decline in cigarette smoking and responded
by developing e-cigarettes and related devices designed
primarily to appeal to youth. He observed that since 2015,
the legislature had failed to enact any meaningful public
policy to restrict youth access and the more time without
policy the more youth will become addicted to nicotine and
the more industry profited. He considered the inaction as
tacit approval for harmful products and advised that
immediate action was necessary.
1:33:32 PM
Co-Chair Merrick asked for a review the fiscal notes.
GLENN HOSKINSON, DIVISION OF CORPORATIONS, BUSINESSES AND
PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT (via teleconference), reviewed the
department's published zero fiscal note (FN3 (CED)allocated
to the Division of Corporations, Business and Professional
Licensing. She explained that the bill merely changed the
legal age to purchase the electronic smoking products. The
division issued tobacco endorsements to businesses that
sold tobacco and e-cigarette products and the process would
not change with passage of the bill. The division did not
anticipate fiscal impact from the legislation.
1:35:01 PM
AT EASE
1:35:12 PM
RECONVENED
Co-Chair Merrick asked for a review of the changes between
the House and Senate versions of the bill.
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, provided the
changes between the bill versions. He communicated that the
bills were largely the same except for the tax rate that
was changed from 75 percent of wholesale to 45 percent. In
addition, it was necessary to consider the definition of e-
cigarette products for the purposes of taxation.
1:36:11 PM
Representative Josephson referenced the tax rate reduction
from 75 to 45 percent. He asked if Mr. Lamkin was referring
to e-cigarette products only and whether the established
tobacco tax would remain the same. Mr. Lamkin answered in
the affirmative. He indicated that the proposed tax only
applied to e-cigarette products.
Representative Wool asked if a product had to contain
nicotine to be taxed.
Mr. Lamkin replied in the negative. He explained that less
than 1 percent of the market share included products that
contained nicotine and the federal government was not
regulating or testing the products. He had discovered from
studies that many of the products did contain nicotine even
though they were labeled otherwise. Vape liquids should be
presumed to contain nicotine. Representative Wool asked
whether all vaping products would be taxed the same. Mr.
Lamkin replied in the affirmative. He reminded the
committee that the point was to keep nicotine out of
children's hands.
1:39:17 PM
NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), reviewed the published
fiscal impact note for the Department of Revenue (DOR)
allocated to Taxation and Treasury (FN5 (REV). She
communicated that the department did not estimate a revenue
impact from the age change because most sellers were
already conforming to the federal age change. In terms of
taxing e-cigarettes, the division estimated that taxing e-
cigarettes at 45 percent of the wholesale price would
generate an additional $2.2 million in revenue in FY 2024,
rising with inflation to $2.4 million in FY 2028. The bill
designated the purpose of the revenue collected for
education, programs, and advertising relating to the
hazards of electronic smoking products. The department had
reflected the revenue under the temporary designated
general fund code 1252 because SB 45 mandated that the
revenue be accounted for separately. She read the following
from page 2 of the fiscal note analysis:
These estimates use updated data from the
Matanuska-Susitna Borough's tax on ESP sales and
updated population data to develop an estimated tax
base for Alaska. Since there is no statewide data
available for ESP sales, there is a wide range of
uncertainty around the revenue estimates. Given the
wide range of uncertainty, no additional adjustment
was made to FY 2024 revenue estimates to account for
potential stockpiling of ESPs in advance of the
effective date of the tax.
Ms. Reynolds furthered that the products would be taxed
under AS 43.50.300, which was an excise tax for products
brought into the state for sale or manufactured in the
state for sale in the state. The fiscal analysis did not
include electronic smoking products purchased online by the
final consumer.
1:43:38 PM
Representative Wool asked for clarification regarding
products purchased online and taxation. Ms. Reynolds
answered the tax would only apply to products brought into
the state to sell. She explained that if a person ordered
the product online for personal use, the tax would not be
levied on the product. Representative Wool asked if it was
legal for someone to order a vape product online and not be
taxed. He asked if the answerer was yes, whether the tax
would further incentivize a person to order the product
online. Ms. Reynolds replied that the tax was not levied on
products brought into the state for personal use,
consequently, if a person were to order electronic smoking
products for personal use over the internet, the tax would
not apply. She did not believe there were any federal laws
preventing a person from ordering tobacco products online
and shipping the product to another state. Representative
Wool stated his impression was that a person was liable for
the state tax if they ordered tobacco products online. Ms.
Reynolds answered that cigarettes were taxed differently
than other tobacco products and were taxable if brought
into the state for sale and for personal use with the
exception of the first 400 brought in for personal use.
1:47:02 PM
Representative Wool stated his understanding of Ms.
Reynolds response.
KATIE STEFFENS, STATE OF ALASKA TOBACCO PREVENTION AND
CONTROL PROGRAM, DIVISION OF PUBLIC HEALTH, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES (via teleconference), reviewed
the Department of Health and Social Services published
zero fiscal note allocated to Chronic Disease Prevention
and Health Promotion (FN 4 (HSS). She related that the
program was responsible for implementing a comprehensive
tobacco prevention and control program and limited
programmatic impact and no fiscal impact was foreseen.
Co-Chair Merrick indicated that the amendment deadline for
SB 45 was on May 4, 2022, at 9:00 A.M.
SB 45 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 45 - E-Cigs Research AK Local Tax Rates February 2022.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |
| SB 45 - E-Cigs Research Cigs in a Pod.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |
| SB 45 - E-Cigs Research Sampling of Confiscated in Schools.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |
| SB 45 - E-Cigs Research T21 in the Military 4.16.2020.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |
| SB 45 - E-Cigs Sectional version D.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |
| SB 45 Public Testimony Rec'd by 042922.pdf |
HFIN 4/29/2022 1:30:00 PM |
SB 45 |