Legislature(1993 - 1994)
02/24/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.