Legislature(2009 - 2010)CAPITOL 106
03/26/2009 03:00 PM House HEALTH & SOCIAL SERVICES
Audio | Topic |
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Start | |
HB188 | |
Confirmation Hearing|| Commissioner, Department of Health and Social Services | |
State Medical Board | |
HB188 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | TELECONFERENCED | ||
+= | HB 188 | TELECONFERENCED | |
HB 188-TAX ON MOIST SNUFF 3:04:31 PM CO-CHAIR KELLER announced that the first order of business would be HOUSE BILL NO. 188, "An Act relating to the taxation of moist snuff tobacco, and amending the definition of 'tobacco product' in provisions levying an excise tax on those products." 3:05:20 PM CO-CHAIR HERRON introduced HB 188 as the prime sponsor and said that he had prepared a Committee Substitute (CS) for HB 188, but had not yet distributed it to other members of the committee. He clarified that the committee would first hear public testimony on HB 188 until 3:30 p.m. and then hear testimony for the confirmations. 3:06:36 PM REPRESENTATIVE COGHILL commented that a CS might require additional testimony. 3:07:04 PM CO-CHAIR KELLER said that public testimony would be opened again. 3:07:18 PM CO-CHAIR HERRON read from the Sponsor Statement [Included in the members' packets.] and explained that HB 188 changed the tax methodology used for smokeless tobacco products in order to discourage the use of tobacco. He stated that the use of "chew" was a crisis in his region. He declared that the additional tax revenue would be placed in the general fund or the cessation fund. He supported a change from the ad valorem tax to a unit tax. 3:08:40 PM DR. JAY BUTLER, Chief Medical Officer, Office of the Commissioner, Department of Health and Social Services (DHSS), testified that one study revealed that a 10 percent increase in the tax on smokeless tobacco would lead to a 4 percent decrease in the use by adults, and a 6 percent decrease in use by boys. He allowed that the health risks are well known and included cancers of the mouth, gum disease, and cardio vascular affects. He said that the use of smokeless tobacco was high in Alaska, almost 5 percent of adults in 2008. He disclosed that tobacco and obesity were the two drivers of increased health care costs. He shared that DHSS was concerned about the weight based tax, as it would reduce the tax on some products and create a price disparity which favored the newer, light weight tobacco products. He described snus as a smokeless, heavily flavored tobacco product, packaged in small, self contained tin packets. He mentioned that the juices could be swallowed which removed the social stigma of spitting. He described the orbs as gel strips, which dissolved in the mouth, but provided the nicotine kick. He acknowledged that the product weight created an uneven tax field and price disparity. He compared the weights for a tin of snus to be 10 percent of a tin of Copenhagen, so the tax would also be 10 percent that of the Copenhagen. He also noted that weight based taxes were inflation proof, as the portion price for tax would decline as the product price increased. 3:12:43 PM DR. BUTLER expressed concern that HB 188 would create low priced tobacco products, which would increase tobacco use among youth. 3:13:16 PM REPRESENTATIVE CISSNA asked about the [health] qualities of the gel strip orbs. 3:13:37 PM DR. BUTLER replied that the health effects were not well defined, but he observed that it was banned in Australia and most of the European Union. 3:15:51 PM EMILY NEENAN, Alaska Government Relations Director, American Cancer Society Cancer Action Network (ACS CAN), applauded the objectives of HB 188 to increase the price, decrease the use, and decrease the death and disease from the use of smokeless tobacco. She disclosed that certain populations of Alaskans had some of the highest smokeless tobacco use in the world. She reported that 67 percent of pregnant women in the Yukon- Kuskokwim (Y-K) region used smokeless tobacco. She expressed concerns about the current version of HB 188. She relayed that the bill did not have any price adjustment for inflation, as the weight based tax was fixed. [She passed around a tin of camel snus.] She expressed concern about the use of these tobacco products by youth, as they were discreet, easy to hide, and nicely flavored. She mentioned that the current ad valorem tobacco tax rate of 75 percent of wholesale price had not been increased since 1997. 3:20:48 PM REPRESENTATIVE CISSNA asked if the use of smaller amounts of tobacco, such as the use of snus, eliminated the dangers. 3:23:01 PM MS. NEENAN, in response to Representative Cissna, said that ingesting tobacco was not safe. She allowed that there was debate about the amount of risk for different tobacco products, but she compared this to playing Russian roulette. 3:23:59 PM JOHANNA BALES, Deputy Director, Anchorage Office, Tax Division, Department of Revenue (DOR), referred to the fiscal note for HB 188, and explained that there would be an initial revenue increase, but that as the lightweight tobacco products became more prevalent, the weight based tax method would decrease the tax revenue. 3:25:30 PM CO-CHAIR HERRON disclosed that the CS for HB 188 would address these issues. 3:26:16 PM MICHAEL HOUGH, Director, Commerce, Insurance and Economic Development & Public Safety and Elections Task Forces, American Legislative Exchange Council (ALEC), declared that this was a tax fairness issue, and that ALEC favored a weight based tax, as opposed to an ad valorem tax. He explained that ad valorem taxed at different rates for like products, as the tax was less for a less expensive product. He expressed that the ad valorem tax would unfairly influence consumer choice. 3:28:02 PM MONTE WILLIAMS informed the committee that USSTC were the manufacturers of the round cans of smokeless tobacco. He explained that excise taxes were levied on individual measureable units. He cited as examples, a gallon of gas, a liter of wine, and a single cigarette. He stated that sales taxes were levied on the price of the product. He referred to the Other Tobacco Products (OTP) tax, which was a percentage of the wholesale price on all tobacco products except cigarettes. He commented on the introduction and sales growth for discounted tobacco products priced "below the premium level," which resulted in the loss of tax revenue for Alaska. He opined that ad valorem taxes favored lower priced brands, and that lower taxes should not be a reward for lowering the price of the product. 3:34:29 PM MR. WILLIAMS said that the ad valorem tax was not a good excise tax policy. He reported that tobacco prices were not increasing, so there was no increased revenue with an ad valorem tax. He cited that price cuts resulted in tax revenue cuts. He commented that a weight based tax was good for revenue, as the same tax was applied to all the products. He stated that the weight based tax was not a reward for lower prices. He reported that 16 states had adopted a weight based tax. He expressed that USSTC supported HB 188. [HB 188 was taken up later in this meeting.] HB 188-TAX ON MOIST SNUFF 4:23:38 PM CO-CHAIR KELLER announced that the final order of business would be a return of the committee's attention to discussion of HB 188. JENNY OLENDORFF expressed concern for tobacco use, especially among children. She stated that she had worked in tobacco prevention programs for three years, and she reported a documented increase in the use of smokeless tobacco products. She noted that the increase of regulations for cigarette use had increased the use of smokeless products by youth. She stated that kids considered smokeless use to be a healthier alternative to smoking. She offered her belief that tobacco companies had increased its marketing of smokeless tobacco to the youth. She opined that HB 188 would make lightweight tobacco products, such as snus, more affordable for youth. She opined that weight based taxes had historically increased tobacco use. She declared that cheaper, more available, tobacco products was "a recipe for passing on a deadly addiction to yet another generation." She expressed her interest in the proposed CS. 4:26:18 PM STEVE WARREN reported that he had established a tobacco cessation program in Sitka. He declared that HB 188 favored lightweight tobacco products. He described the tobacco marketing campaign as designed to attract youth. He suggested that there be a tax on units of nicotine. He expressed his concern with the current version of HB 188. 4:29:52 PM CO-CHAIR HERRON, in response to Mr. Warren, said that the CS for HB 188 would target the lightweight products. 4:31:31 PM CARRIE NYSSEN, Senior Director of Advocacy, American Lung Association of Alaska, said that the American Lung Association was concerned with the long term effect of HB 188. She described the bill as special interest legislation that would distort the tobacco taxation system for the benefit of a tobacco manufacturer. She endorsed the current ad valorem tax system of tobacco products, other than cigarettes. She declared that the weight based tax created a tax loophole for the low weight products, and that this tax would not maintain pace with inflation or price increases. She expressed concern for the increased nicotine addiction of Alaskan youth, as a weight based tax favored the smokeless tobacco products that were attractive to youth. She offered support for a policy to increase revenue and discourage tobacco use. 4:34:47 PM REPRESENTATIVE SEATON, referring to the testimony about the addition of nicotine to other products, asked if nicotine was regulated by the Food and Drug Administration (FDA) and if it was permitted as a chemical additive to other products. 4:35:39 PM MS. NYSSEN said that she would get some information. 4:35:59 PM REPRESENTATIVE CISSNA compared the current nicotine additive to the historical addition of cocaine to Coca-Cola. 4:36:47 PM CHRIS SHIRWIN, Vice President, Advocacy and Government Affairs, said that the American Heart Association shared the same concerns as the other agencies. He warned of the harms from smokeless tobacco, and the concern that these were "gateway" products. He said that a weight based tax favored the premium smokeless products, as this would lower its taxes. He lobbied to increase the ad valorem tax, or implement a significant tax floor for these products. 4:41:23 PM REPRESENTATIVE LYNN asked about the goal of the bill. 4:41:42 PM CO-CHAIR HERRON reflected that "chew" was at a crisis level in his district. He responded that his goal was to increase revenue to the cessation fund, instead of the general fund. He opined that the danger was the new lightweight tobacco products, not the ad valorem tax. 4:44:11 PM REPRESENTATIVE LYNN shared a concern for the expansion of the "sin" taxes. 4:44:36 PM CO-CHAIR HERRON said that he was annoyed with the advertising messages. He established that his original intent with HB 188 was to reduce the use of tobacco products, and to increase funding for the cessation grants. 4:45:44 PM CO-CHAIR KELLER reminded the committee to keep the questions to the bill at hand. 4:45:58 PM REPRESENTATIVE CISSNA declared that "habit" had brought Alaska nationwide attention for bad habits. She requested that any solution not allow for the continuance of "habits." 4:48:08 PM REPRESENTATIVE SEATON reopened the question of whether the placement of nicotine in other products could be restricted by state law, if it was not restricted by federal law. He summarized about the need to curtail nicotine addiction and he commented on the possibility of a "tax floor per sale," which would cover weight or quantity. 4:50:02 PM [HB 188 was held over.]
Document Name | Date/Time | Subjects |
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Confirmation Resumes.pdf |
HHSS 3/26/2009 3:00:00 PM |
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HSS188pkt.PDF |
HHSS 3/26/2009 3:00:00 PM HHSS 4/9/2009 3:00:00 PM |