Legislature(1997 - 1998)

02/13/1997 03:03 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HB - 1 CIGARETTE AND TOBACCO TAX                                            
                                                                               
 Number 1486                                                                   
                                                                               
 CHAIRMAN BUNDE announced that the next item on the agenda was CSHB
 1(HES), "An Act relating to taxes on cigarettes and tobacco                   
 products; and providing for an effective date."                               
                                                                               
 Number 1489                                                                   
 DAVE PETERS testified next via teleconference from Valdez.  He said           
 he was against CSHB 1(STA) as he did not see how raising the taxes            
 on cigarettes was going to keep kids from smoking.  He said it                
 would just make them be able to steal cigarettes a little easier.             
 He said maybe if a tax was imposed on alcohol, or a tax to boost              
 the situation where people get fined for selling kids the                     
 cigarettes, would work.  He said kids will still have the access,             
 they will just steal more from their parents.  He said CSHB 1(STA)            
 will hurt him as he is a smoker.                                              
                                                                               
 Number 1590                                                                   
                                                                               
 CHAIRMAN BUNDE referred to the evidence supporting the increase in            
 tobacco costs with a drop in underage smoking.  He also cited the             
 costs to the state because of tobacco related illnesses.                      
                                                                               
 MARLENE LEAK testified next via teleconference from Fairbanks.  She           
 said state government wants more money and is using pious                     
 platitudes that the solution to any problem is more tax money.  She           
 went on to say that some health related non-profit organizations              
 have found that being anti-tobacco is a veritable gold mine in                
 contributions and government grants.  These organizations, for                
 public relations purposes, need a little moral victory for their              
 cause, without threatening a ban on tobacco, and the tax increase             
 does look good there.                                                         
                                                                               
 MS. LEAK asked the committee to recall that the March of Dimes was            
 almost wiped out when Dr. Salk discovered a vaccine for polio, but            
 with quick thinking a new cause was picked.  The cause they chose             
 was birth defects which has a myriad of causes and is unlikely to             
 be cured.  She asked if tobacco would be as easy to replace.  She             
 said non-profit organizations, profiting from tobacco, can't take             
 that chance.                                                                  
                                                                               
 MS. LEAK said about a year ago, a front page article in the Wall              
 Street Journal detailed how a massive increase in tobacco tax in              
 Canada began a giant black market for cigarettes.  Later in 1996,             
 Canada lowered the tobacco tax.  A federal luxury tax increase was            
 reversed a few years ago due to a loss of ship building jobs when             
 sales of yachts went overseas or to the used yacht market.  As the            
 Boston Tea Party showed, the public will not respect a greedy,                
 arrogant government.  Even when we get sanctimonious sermons that             
 it is worth the tax to discourage teenagers from smoking.                     
                                                                               
 MS. LEAK said if the correlation studies which tell us that tobacco           
 kills several hundred thousand U.S. citizens per year were true, it           
 would be murder for the legislature to leave this substance legal.            
 Assuming that you believe the numbers to be true, the tax would be            
 blood money for the state.  She suggested that states, such as                
 Alaska, might be sued by victim's families who might claim that the           
 state knew that tobacco was a killer, but was left legal for short            
 term tax increase gain.  She asked if this showed compassion on               
 behalf of the legislators.  She asked the legislators to admit that           
 they want more tax money and that they would do and say anything to           
 get it.  She said she is against CSHB 1(STA).                                 
                                                                               
 Number 1745                                                                   
                                                                               
 BETTY ROLLINS testified next via teleconference from Fairbanks.               
 She said she is a non-smoker, but CSHB 1(STA) allows the state to             
 hide behind the bad guy.  We have 3,000 contaminated sites in the             
 state of Alaska, and many contaminated sites in the NorthStar                 
 Borough.  She said there has been no action by the legislature or             
 by any government entity to assist with this problem.                         
                                                                               
 MS. ROLLINS said she talked with the Michigan DOR where bootlegging           
 is a very serious problem.  She said the state of Michigan raised             
 their tax 200 percent, but only received 28 percent in additional             
 tax revenues from the tobacco tax.  She asked Mr. Vesley [Ph] of              
 DHSS if he had any statistics on any of the programs designed to              
 discourage underage smoking, how many children did not smoke                  
 because of those programs.  She was told that DHSS did not have the           
 ability to go out and find these figures.  She was faxed a 2-year-            
 old supposition by DHSS to tell people that a tax increase will               
 stop teen smoking.  She said it is the same supposition that is               
 being used today.                                                             
                                                                               
 MS. ROLLINS said she has a letter from the Department of Public               
 Health signed by state troopers and the Michigan Department of                
 Public Health.  The letter says that even though they are getting             
 more money in tobacco tax, it will start interfering with the                 
 private lives of people.  Highly trained officers are following up            
 on tests and making arrests when illegal activity occurs such as              
 when people cross state borders to buy two or three cartons of                
 cigarettes.  She said there is a special force to take care of this           
 in Michigan.  She asked if we wanted to do this in Alaska.                    
                                                                               
 Number 1848                                                                   
                                                                               
 DOUG YATES testified next via teleconference from Fairbanks.  He              
 said the tobacco industry is big business, spending billions to               
 advertise their products.  He said most of that advertising money             
 is used to convince children that the glamour of using their                  
 products outweighs long term health consequences.  As a result of             
 the industry's power and their vested interest, tobacco will never            
 be outlawed.  Society will never place it in the same arena as                
 marijuana, it is too strongly established as part of this culture's           
 accepted addictions.  The only avenue to free thinking men and                
 women who recognize its cost to our people is to employ a level of            
 taxation that begins to address these costs.                                  
                                                                               
 MR. YATES said he was astounded that there was so much opposition             
 to this measure since Republicans pride themselves on fiscal                  
 responsibility.  He asked what better way to ease the financial               
 burden of raising a family in Alaska then to reduce the cost of               
 health care.  According to reliable estimates, significant money              
 can be saved if we work to eliminate health care costs associated             
 with tobacco addiction.  He said the tobacco industry relishes the            
 ideological morass spawned by the issue of taxation.  In each state           
 where taxation is an issue, there are guys who stand and point at             
 tax proponents.  He urged all legislators to set aside ideological            
 differences and realize that increased taxation will begin to tilt            
 the scales for the long term advantage of the state.                          
                                                                               
 Number 1938                                                                   
                                                                               
 SCOTT CALDER testified next via teleconference from Fairbanks.  He            
 wanted to reflect on the assertion that is being made that the                
 reason to tax tobacco is to prevent children from smoking, or to              
 deter children from smoking.  In connection with his experiences              
 with the state's juvenile authorities, he wanted to tell the                  
 committee why this is a false perspective.  He said we want to tax            
 tobacco so that we can pay for government.  He said the state of              
 Alaska pays specialized foster parents $90 a day and that the                 
 foster parent who took care of his son was buying cigarettes for              
 his son.  He questioned why the legislature was raising taxes and             
 accruing more funds to pay for services for which there is no                 
 oversight or recourse to a parent like himself, who is faced with             
 a specialized foster parent providing cigarettes to his child.  He            
 said he did not want any more taxes or any more liabilities to the            
 people in the state of Alaska until those problems are corrected.             
 He suggested that every man, woman and child in the state of Alaska           
 would be better off if they smoked a pack a day than if they had to           
 put up with that type of government.                                          
                                                                               
 Number 2066                                                                   
                                                                               
 CHAIRMAN BUNDE said there is no indication that any monies raised             
 from this tobacco tax would go to the Division of Family and Youth            
 Services (DFYS).  He said CSHB 1(STA) dedicates the money to a                
 school construction fund.  His other point was that a vast majority           
 of people in the state of Alaska asked the legislature to address             
 this issue.  He referred to a letter by the Federation of                     
 Independent Businesses which had 62 percent of their members in               
 favor of supporting this tax.  He said this is not some plot from             
 government, it is simply government responding to the requests of             
 their constituents.                                                           
                                                                               
 Number 2097                                                                   
                                                                               
 CAM CARLSON testified next via teleconference from Fairbanks.  She            
 said she is a non-smoker, but is adamantly opposed to the tobacco             
 tax.  The purpose of taxes is not social, behavior modification or            
 social engineering and added that it is being used as an excuse for           
 increased revenues.  She said saying the money will be used for               
 schools is just kind of facetious and added that if we think so               
 little of schools that the only way we can get money for them is to           
 tax and bite, then it is a pretty sad state of affairs.  She                  
 referred to the previous testimony regarding foster parents letting           
 kids smoke and the problems that need to be corrected in this area.           
                                                                               
 Number 2149                                                                   
                                                                               
 CHAIRMAN BUNDE said if CSHB 1(STA) works and is a barrier, then               
 these children won't begin to smoke and maybe that will solve that            
 problem.  He said this is a totally voluntary tax, no one has to              
 pay this tax.  They simply don't smoke and they won't pay for the             
 tax.  He reminded those people concerned over taxation that smokers           
 cost the state of Alaska nearly $200 million a year.  He asked if             
 those people would rather pay an income tax to take care of those             
 expenses or if they think a user fee is more appropriate.                     
                                                                               
 TAPE 97-10, SIDE B                                                            
 Number 0000                                                                   
                                                                               
 DON DAPCEVICH, Executive Director, Advisory Board on Alcoholism and           
 Drug Abuse, said the legislative committee spent the major part of            
 this morning meeting telephonically to speak about the tobacco tax.           
 He said they wanted him to convey to the committee that those                 
 members from Fort Yukon, Palmer, Fairbanks, Anchorage and Ketchikan           
 have gone into their communities and talked with people and have              
 made up their minds that they want to support this initiative.  He            
 said they want to congratulate the committee on bringing it                   
 forward.  He said the committee hopes the state doesn't collect a             
 dime on these taxes, they would prefer that people not smoke.                 
                                                                               
 MR. DAPCEVICH said there is no question that cigarettes are a                 
 gateway drug.  He said this does not suggest that there is a causal           
 relationship between smoking tobacco and smoking marijuana or using           
 heroin, but it is well established that tobacco is certainly a                
 gateway drug.  He said it is also well established that as price              
 goes up, use goes down especially among the most price sensitive              
 group which is youth.  He said his committee urged the legislature            
 to pass CSHB 1(STA) with one cautionary note.  He said they felt              
 that education efforts, for tobacco and other drugs, should be                
 redoubled in the schools.  He said, as price goes up and                      
 accessibility goes down, we need to make some measures for smoking            
 cessation programs for youth and adults.  He said CSHB 1(STA) will            
 improve the health of people in the state and only requires that              
 users of tobacco pay the tax.                                                 
                                                                               
 Number 0163                                                                   
                                                                               
 REPRESENTATIVE PORTER made a motion to move proposed Amendment 1 to           
 CSHB 1(STA).                                                                  
                                                                               
 Number 0182                                                                   
                                                                               
 REPRESENTATIVE VEZEY objected to the motion.                                  
                                                                               
 Number 0187                                                                   
                                                                               
 CHAIRMAN BUNDE said the purpose of proposed Amendment 1 is to                 
 discourage prolonged litigation.  He said HB 1, as amended,                   
 contains the dedication to the school fund and there is a                     
 severability clause in the bill that said if there were litigation            
 that found this dedication to be unconstitutional, then the money             
 would go into the general fund.  He said the proposed Amendment 1             
 is a provision to discourage prolonged litigation which might be              
 filed in hopes of tying this issue up for a number of years before            
 the tax becomes effective.                                                    
                                                                               
 Number 0239                                                                   
                                                                               
 JACK CHENOWETH, Attorney, Legislative Legal Counsel, Legislative              
 Legal and Research Services, Legislative Affairs Agency, clarified            
 that the proposed Amendment 1 was E.2.  He said, "E.2 as I                    
 understand it is in response to an Assistant Attorney General's               
 concern that because the main bill, the increase in the taxes in              
 the main bill are set to take effect October 1, 1997, that there              
 needs to be a retroactive feature for the provisions in the bill              
 that deal with .090 and .190(a), .090(a) in Section 2 and .190(a)             
 in Section 4 and a means by which the levy, the amount raised by              
 the levy, by the increased levy is directed properly for the                  
 cigarettes that are sold after October 1.  I think it has to do               
 with the concern that there be some mechanism in place to protect             
 the state, the school fund in the event there is protracted                   
 litigation and some means by which the revenue can be accounted for           
 and followed through in the event litigation eventually works out             
 to be contrary to the position that this money go into the, into              
 the school fund."                                                             
                                                                               
 Number 0354                                                                   
                                                                               
 A roll call vote was taken on the proposed Amendment 1.                       
 Representatives Bunde, Porter, Brice, Kemplen and Dyson voted yea.            
 Representative Vezey voted nay.  Representative Green was absent              
 for the vote.  Amendment 1 was adopted to CSHB 1(HES).                        
                                                                               
 CHAIRMAN BUNDE called for an at ease at 3:53 p.m.  The committee              
 meeting resumed at 3:54 p.m.                                                  
                                                                               
 Number 0415                                                                   
                                                                               
 REPRESENTATIVE PORTER made a motion to move CSHB 1(HES) with                  
 individual recommendations and attached fiscal notes.                         
                                                                               
 REPRESENTATIVE VEZEY objected to the motion.                                  
                                                                               
 A roll call vote was taken on CSHB 1(HES).  Representatives Bunde,            
 Dyson, Kemplen, Brice, Green and Porter voted yea.  Representative            
 Vezey voted nay.  CHAIRMAN BUNDE declared that CSHB 1(HES) was                
 moved from the House Health, Education and Social Services Standing           
 Committee with individual recommendations and attached fiscal                 
 notes.                                                                        

Document Name Date/Time Subjects