02/24/1994 03:00 PM House L&C

  HB 413 - INCREASE TOBACCO & ALCOHOL TAXES                                    
                                                                               
  Number 619                                                                   
                                                                               
  LOREN JONES, Division of Alcoholism and Drug Abuse,                          
  Department of Health and Social Services, testified in                       
  support of HB 413.  Mr. Jones stated that HB 413 does raise                  
  the alcohol tax significantly.  The Division of Alcoholism                   
  is interested in HB 413 and its potential effect on the                      
  consumption of alcohol.  Alaska currently ranks currently                    
  ranks fourth in the nation in the consumption of alcohol.                    
                                                                               
  MR. JONES noted that the last time the tax was raised was                    
  1983 and consumption has gone down from that year until this                 
  year when consumption went back up.  Mr. Jones stated that                   
  the tax increase of 1983 had a significant influence on the                  
  decrease of consumption, and that inflation may be coming                    
  into play with the increase we are seeing now.                               
                                                                               
  MR. JONES told the committee that the increase tax may have                  
  some affect on the consumption of alcohol by youth.                          
                                                                               
  TAPE 94-16, SIDE A                                                           
  Number 001                                                                   
                                                                               
  MR. JONES concluded by saying it was the Division of                         
  Alcohol's belief that HB 413 will decrease consumption and                   
  combat some of the impacts of alcohol abuse.                                 
                                                                               
  Number 010                                                                   
                                                                               
  CHAIRMAN HUDSON asked Mr. Jones what the Division's annual                   
  budget was at this time.                                                     
                                                                               
  Number 013                                                                   
                                                                               
  MR. JONES replied 21 million -- 12% general fund money, 85%                  
  mental health trust land money, and the rest from the                        
  federal government.                                                          
                                                                               
  Number 015                                                                   
                                                                               
  REP. MULDER asked if there was any statistical information                   
  that would verify the supposition that increased price would                 
  decrease usage.                                                              
                                                                               
  Number 020                                                                   
                                                                               
  MR. JONES showed the committee a graph that tracked usage                    
  from 1981 to present.  The graph clearly showed a decrease                   
  in consumption after the tax increase in 1983.                               
                                                                               
  Number 025                                                                   
                                                                               
  CHAIRMAN HUDSON asked how that corresponded to population                    
  growth.                                                                      
                                                                               
  Number 031                                                                   
                                                                               
  MR. JONES replied that the population has increased.                         
                                                                               
  Number 036                                                                   
                                                                               
  REP. MULDER asked if there were other influences around that                 
  time that may have affected the consumption of alcohol.                      
                                                                               
  Number 050                                                                   
                                                                               
  MR. JONES replied that in the 1980's tougher legislation on                  
  drunk driving was passed; there was increased prevention in                  
  the schools; drug free school money came from the federal                    
  government; and prevention among youth and education for                     
  adults were a priority.  Mr. Jones added that the increased                  
  tax on alcohol in 1983 was not the only factor in the                        
  decrease in consumption, but he believed it was an important                 
  one.                                                                         
                                                                               
  Number 070                                                                   
                                                                               
  REP. MULDER stated that if the point of the legislation was                  
  to raise revenue, this was a good way; but if it was to                      
  deter alcohol use, he didn't believe it was effective.                       
                                                                               
  REP. MULDER added for the record, if this tax was approved,                  
  it would make Alaska the highest rate of alcohol tax in the                  
  nation.                                                                      
                                                                               
  Number 081                                                                   
                                                                               
  GLEN RAY, Division of Public Health, testified in support of                 
  HB 413.  Mr. Ray stated that the Division supports HB 413                    
  for the purpose of reducing the burden of disease caused by                  
  tobacco use.  Casual links exist between tobacco use and                     
  many chronic diseases.  Mr. Ray stated that tobacco is a                     
  drug that when used as directed will kill one out of three                   
  long term users, and disable many more.  He said tobacco is                  
  as addictive as heroin and cocaine.                                          
                                                                               
  MR. RAY provided the committee with a position paper                         
  supporting HB 413 that included statistics regarding smoking                 
  and its related costs.                                                       
                                                                               
  MR. RAY sated that affordability of tobacco appears to be                    
  the most important determinant of the number of children who                 
  will start smoking.  An increase in the cigarette excise tax                 
  may be the most effective approach to reducing tobacco use.                  
  He added that teenagers are much more responsive than adults                 
  to increases in the price of cigarettes because they have                    
  less disposable income and may be three times more sensitive                 
  to price increases than adults' consumption.  Also, children                 
  and teenagers are usually less addicted than many adult                      
  smokers and, therefore, more likely to be able to stop                       
  smoking when prices increase.                                                
                                                                               
  MR. RAY concluded by saying that an increased tobacco tax                    
  will immediately show a drop in consumption by youth and                     
  decrease in the number of youth who begin to use tobacco                     
  products.                                                                    
                                                                               
  Number 120                                                                   
  PAUL DICK, Department of Revenue, testified regarding the                    
  fiscal note to HB 413.                                                       
                                                                               
  MR. DICK stated that HB 413 would increase excise taxes on                   
  liquor, wine and beer by 50% and it would double the current                 
  excise tax on tobacco.  The additional revenues this bill                    
  would generate based on this year's consumption level would                  
  be just under $15 million.                                                   
                                                                               
  CHAIRMAN HUDSON adjourned the meeting at 5:00 p.m.