Legislature(1995 - 1996)
03/14/1996 03:31 PM Senate STA
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* first hearing in first committee of referral
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SB 210 INCREASE TOBACCO TAXES
SB 234 INCREASE TOBACCO TAXES
TAPE 96-20, SIDE A
Number 001
CHAIRMAN SHARP called the Senate State Affairs Committee to order
at 3:31 p.m. and brought up SB 210 and SB 234 as the first order of
business before the committee. The chairman called Senator Ellis
to testify.
Number 015
SENATOR JOHNNY ELLIS, prime sponsor of SB 210, read the sponsor
statement for SB 210. Under this proposal, cigarettes would be
taxed at a rate of $1.29 per pack through FY99. From FY00 through
FY02, cigarettes would be taxed at $1.53 per pack. From FY03
through FY05, cigarettes would be taxed at a rate of $1.77 per
pack. Thereafter, the increments increase progressively at the
rate of $0.24 per pack at intervals of three years. The tax for
smokeless tobacco will increase from 25% of the wholesale price to
100% of the wholesale price of those products. This bill differs
from the Long-Range Financial Planning Commission's legislation in
that it inflation-proofs the tax levied. Senator Ellis hopes that
SB 210 and SB 234 will move on to the Finance Committee, and they
will have a debate there about the financial aspects of the
legislation. It is estimated that $43,000,000.00 will be raised in
FY 97 by SB 210.
SENATOR ELLIS stated there would be no additional paperwork for
business people and no new forms or bureaucracy: the tax would
continue to be collected at the wholesale level. The support for
this bill is very strong among smokers. Many people have mentioned
to him that this bill would be a help to them in quitting smoking.
And maybe we can stop some children from starting smoking. Senator
Ellis stated that the cost to government caused by smoking-related
illness is enormous. Current taxation levels don't come close to
paying for costs to government, so we cannot complain about the
rising health-care costs to government, when cigarettes are
responsible for much of those costs and are not recouped through
taxation. He asked that the committee look favorably on SB 210.
Number 115
SENATOR RANDY PHILLIPS asked Senator Ellis if he would be
interested in dedicating part or all of the revenues from SB 210 to
education or health.
SENATOR ELLIS responded he is completely open to any suggestions,
but there may be a constitutional problem with dedicated funds and
tampering with the pre-statehood dedicated school tax fund.
SENATOR RANDY PHILLIPS thinks it might require a constitutional
amendment.
Number 130
CHAIRMAN SHARP stated the committee would take public testimony on
SB 210 and SB 234 and continue until the committee gets a quorum.
At that time, the committee will set that legislation aside to
adopt committee substitutes for SB 231 and SB 222. He called Dr.
Palmer to testify.
Number 145
DR. WILLIAM PALMER informed the committee that he just left his
office, where he's dealing with a woman whose respiratory rate is
greater than her heart rate. She's still smoking, of course. But
it will kill her; there's not any question about that. He stated
that when he came to Juneau in 1973, he was stepping into a corner
of the operative suite, putting his hands behind his back and
coughing uncontrollably. That's when he quit smoking. Part of the
reason was he buried two women under 50 years of age who died on
ventilators at Bartlett Memorial Hospital because they could not
oxygenate themselves any longer. Neither of them died of cancer;
they just died from one of those other "minor" problems that
cigarette smokers get.
DR. PALMER stated he is personally outraged at the cynicism in the
United States at shipping tobacco overseas. The mendacity of the
cigarette selling industry in this country is absolutely beyond the
pale. He has people he is burying; having been here since 1973,
these are no longer patients, in a community of this size, these
are friends, relatives, and neighbors. Anything that can be done
to redress what's been going on...he thinks this is a wonderful
place from which to start. Dr. Palmer stated that he is the
recipient of a moderate amount of funds from the state, and an
awful lot of those funds are coming from the ravages of cigarette
smoking. If health-care is going to be addressed at any level,
this seems like a good place to start.
Number 200
GLENN HACKNEY, American Cancer Society, former state senator,
stated it is a switch being on the testifying end of things. He
stated that the legislation before the committee might not be
viewed as purely a tax bill, but as a health bill or preventive
medicine. One of the costs of smoking is the 420,000 some lives
that are lost each year to smoking-related illnesses. These
statistics present a dilemma for the tobacco companies: their
customers insist on dying, as Dr. Palmer pointed out. Somewhere
there has to be a replenishment pool of customers. The unfortunate
fact is that young people are the ideal market. Statistics show
that one of the best preventive methods to keep young people from
taking up smoking is the cost of the product. If young people can
be kept from smoking until they reach about 19 years of age, they
are liable not to start smoking. Mr. Hackney stated he started
smoking at the age of twenty during wartime when the cigarettes
were free. This bill would help kids not to smoke. There are
about 50 or 60 kids who gather across from Lathrop High School to
smoke. A good hard-headed approach would say, "Get some police
officers up there and round up those young rascals and haul them
off to jail." It doesn't work like that. The trick is, that they
don't get started.
MR. HACKNEY stated that most of the people at this hearing are off
the streets: they are not professional lobbyists, they're not
professional speakers. He well remembers that lobbyists, like
bikers, are everywhere. There was a gentleman by the name of
Crawford who is a lobbyist for the major cigarette companies, and
he made the statement that it was his job to stop any bill that had
anything to do with preventing smoking.
MR. HACKNEY stated that legislators have a chance to do something
for their young constituents. He has heard people down here say,
"We're not going to do anything as far as raising taxes, raising
more money, until we get spending under control." Mr. Hackney
suggested that the tobacco tax increase bills be advanced. He
believes the bills have wide support in the senate. If the bill
gets over to the House Rules Committee, and the spending cuts don't
take place, let it die. If the cuts do take place, then pass it.
You will be doing a favor to your constituents.
SENATOR RANDY PHILLIPS asked Mr. Hackney about dedicating revenue
raised by this legislation. Would he support something like that?
MR. HACKNEY responded that it is a cumbersome and somewhat
unnecessary process. He doesn't believe it needs to be done. He
trusts the legislature to spend the money the right way. He
doesn't thinks a dedicated fund is necessary.
Number 298
STEVEN HAMILTON, Research Analyst, Governor's Advisory Board on
Alcoholism & Drug Abuse, Department of Health & Social Services,
stated that tobacco and tobacco products are gateway drugs,
particularly for young people, and there is a positive correlation
between demand and willingness to pay in price. For those reasons,
the advisory board strongly supports SB 210. We support increased
excise taxes on tobacco products in general, but like the built-in
adjustment for inflation in SB 210. Mr. Hamilton's experience in
running chemical dependency treatment centers is that in virtually
every single case in which they saw adolescents who were addicted,
they were smokers and they started with tobacco products. The
advisory board strongly supports SB 210.
Number 313
TERESA LYONS, Fairbanks District of the Alaska Nurses Association,
testifying from Fairbanks, supports SB 210 and or SB 234. She
supports the tobacco tax as a mechanism to influence use,
particularly focusing on choices of Alaskan youth. Nicotine is
considered an addictive substance that requires prescription by
physician or nurse practitioner for the use of Nicorette gum or
nicotine patches. These products are used by smokers attempting to
wean themselves away from tobacco products. Allowing cigarettes to
be available at minimal cost, while requiring prescriptions and
costly medication of the same substance sends a confusing message
to the youth of Alaska. We have three levels of influence
available to us to limit smoking to young people: education, which
is occurring; age limits, which are in place; and the cost of the
product, which has not been utilized to its' fullest. The only
avenue available for the government to affect the price of a
product is the use of taxation. Ms. Lyons thinks that by not
increasing the tobacco tax, we are sending a social and behavioral
message. Legislators are being asked to use economic influence to
send the right message. Please help to protect the health of our
children and our youth: move these bills out of committee and
support the passage of an increased tobacco tax.
Number 350
LOIS IRVIN, testifying from Homer, supports SB 210 and SB 234. She
also supports the house versions of these bills, which don't seem
to be moving. Therefore, she certainly supports SB 210. She
endorses what the previous speakers have said. Ms. Irvin thinks
this legislation is very important.
Number 360
FRANCES YOUNG, testifying from Ketchikan, informed the committee
that she is the mother of eight children and involved with Alaskans
for Drug-free Youth. She is also working with the Southeast Seven
Circles Coalition, which is addressing the issue of drugs and how
to reduce their use. She supports either SB 210 or SB 234. She
thinks the inflation proofing in SB 210 is a good idea. She has
been told by smoking adults that the cost increase would help them
stop smoking. She stated she also concurs with Dr. Palmer and
Glenn Hackney in that cost is a deterrent to smoking, especially
for children. She urges the committee to resist the tobacco
lobbyists and listen to the grass-roots people in the state. Ms.
Young understands the problem with dedicating funds, but if there
are increased state revenues, maybe some of it could be used for
prevention of nicotine addiction. Funds are also need to start
smoking cessation programs. It is such a hard thing to quit
smoking, and somehow we need to help those people who want to quit.
It would certainly help to have money for those types of programs.
She thinks this tax would be very helpful in many ways.
CHAIRMAN SHARP agreed with Ms. Young that it is very hard to quit
smoking. He stated he smoked for 19 years and was up to over three
packs a day. His wife had to put up with him for a few months
after he quit.
Number 393
DR. RODMAN WILSON, Executive Director, Alaska State Medical
Association, stated all legislators will receive a copy of ASMA's
quarterly Journal, Alaska Medicine. This issue will be totally
devoted to cigarettes. He hopes legislators will have a chance to
look at the journal. The association supports raising the tax on
tobacco and would support either SB 210 or SB 234, although SB 210
looks a little bit better to him. Dr. Wilson stated when he was
the Public Health Director in the City of Anchorage in the mid-
eighties, he studied the contribution of tobacco toward deaths in
Anchorage and found, conservatively estimated, that 20% of all
deaths in Anchorage were directly attributable to tobacco. The
state epidemiologist, John Middaugh, did a similar study from 1991-
1993 and came up with a 19% figure. It's an enormous burden to
society, not just in terms of mortality, but also morbidity. We
are very much in favor of raising taxes. Raising taxes sharply
won't solve the problem with youngsters taking up the habit, but it
is a powerful, powerful tool, and we urge you to pass this
legislation. ASMA's interest in this legislation has nothing to do
with solving the fiscal crisis in Alaska: we want it done for its'
own sake. In this country in this century alone, upwards of
30,000,000 people will have died by the year 2000 from tobacco. It
is a shame on our culture and society that when we began to know by
mid-century how terrible tobacco is, that we haven't done more than
we've done. Here is your chance to do a little bit toward this
awful problem in Alaska.
Number 433
DR. PETER MJOS, testifying from Anchorage, stated he serves on the
State Board of the American Heart Association. Dr. Mjos stated
that disease, disability, disfigurement, and death are the true and
only legacy of tobacco. If you disagree with that, then we should
all go home. If you agree with that, then you must agree that
something must be done. In his practice, he has seen disease
across all generations, extending even from before conception and
certainly unto death. What we are discussing is major public
health legislation: this is not a tax issue, and should not be
construed as one. To construe this as a tax issue would be merely
a "smoke screen". Children start smoking; adults do not start
smoking. Most surveys conducted in this country have used as a
demonstration figure $2.00 per pack of cigarettes. Across all
demographic lines, there has been overwhelming support, with one
exception: smokers. Experience in Canada and New Zealand has shown
that to raise the price of tobacco products markedly diminishes the
number of youngsters who will start smoking. Dr. Mjos mentioned
the Ligget-Myers Corporation's multi-million dollar settlement with
states, which is occurring at this time. There are enormous state
and federal expenditures involved in tobacco-related illness. To
increase this tax will diminish the number of smokers and the
amount of disease.
Number 470
GENEVIEVE GAGNE-HAWES stated that in her health class, one of the
kids was talking about how stupid suicide was, and he couldn't see
why anyone would kill themself. But that kid smokes. He is slowly
killing himself with tobacco. Adults don't start smoking; kids
start smoking, and kids get addicted. Recent surveys show the
number of kids smoking is growing. Ms. Gagne-Hawes stated that
money is behind the sale and purchase of tobacco. The more
something costs, the less likely teenagers will be to spend money
on it. A $1.00 a pack increase will bring down the number of youth
smokers in Alaska by 32%. 74% of all Alaskans support this tax.
If kids want tobacco, they should have to pay more for it than they
are right now. Because in the long run, it's costing them their
lives.
Number 505
JUSTINE MUENCH, President, Juneau District of the Alaska Nurses
Association, stated that the last twenty years of her career have
been in coronary care units, intensive care units, and a cardiac
and pulmonary rehabilitation center. Every day she works with
people whose primary risk factor for being in a rehabilitation
center is that they have smoked. Ms. Muench contended that smoking
is the only one, true preventable risk factor for cardio-vascular
disease. The other top two, high blood pressure and high
cholesterol level, have genetic predisposition. Smoking does not;
it is a choice. The public health toll for this habit is enormous.
She stated that the patients she sees every day all started smoking
in their teens. She sees very few patients with cardio-vascular
disease who have never smoked. All of the pulmonary patients have
smoked, and some of them still smoke, even with their oxygen in
hand. They have all stated to her, "If only I had known as a
teenager; if only my parents hadn't smoked; or if it was not so
cheap and readily available." Ms. Muench stated she is referring
to people with cardio-vascular disease who are in their thirties
and forties. It used to be that most of her patients were all
older than her. Half of the patients she works with now are
younger than her: they are 29, 30, and 35.
MS. MUENCH stated this is not a tax issue, as has been said several
times; nor is it a discriminatory issue. This is a health issue.
We all pay for smoking addiction with loved ones who have died or
become very ill. We pay with higher health-care costs and higher
insurance premiums. Smoking is no longer an individual behavior
that only affects the person who is smoking: it affects their
family members and coworkers, the health-care system, and employee
work habits. The State of Alaska has within its' power one means
to stop the alarming rates of smoking in this state. She does not
believe that a tax alone will be enough, but it is time to have a
more equitable system for paying for this addiction. It makes
sense to offer a disincentive to smoke, along with continuing
existing education and role-model programs, rather than a punitive
system or penalties for underage smokers. This would seem to her
to be a burden to an already overburdened judicial and police
system. She urged support of increasing taxation on tobacco
products in the hopes that fewer people will start smoking, more
will quit, we will have a healthier state, and perhaps she can
retire earlier than anticipated.
Number 548
GLENN RAY, Manager - Health Promotion Program, Community Health &
Emergency Medical Services, Division of Public Health, Department
of Health & Social Services, stated he wanted to address an earlier
statement that this tax would not cure the problem. That is true,
but he wants to frame that within what is happening nationally. In
every one of the fifty states, there is a tobacco prevention and
control program. That program is funded with federal dollars. In
addition to that, ten programs are funded through the Robert Wood
Johnson Foundation; those ten programs are administered by the
American Medical Association. Alaska is a recipient of two of
those grants: the Robert Wood Johnson Foundation and the CDC
Foundation. In all those programs, there are four strategic areas:
youth access, media advocacy, clean indoor air, and pricing. It is
in the pricing area that taxation is important. Taxation is the
public's way of increasing the price of tobacco. It is clear from
the experiences in California, Massachusetts, Canada, and other
smaller locations that when there is an increase in the price of
tobacco, there is a decrease in youth consumption. That is
significant to the long-range reduction of tobacco use.
Number 565
ANNE MARIE HOLEN, Citizens to Protect Kids from Tobacco Coalition,
testifying from Anchorage, stated the coalition is a statewide
coalition of organizations and individuals who support the proposed
legislation to increase state tobacco taxes. The coalition
includes the American Cancer Society, the Lung Association, the
Heart Association, the Alaska Native Health Board, the State
Medical Association, the State Public Health Association, the
Association of Alaska School Boards, and so many other
organizations that if she listed them all she would use up her
three minutes. Citizens to Protect Kids from Tobacco Coalition
strongly urged the committee to support the proposed legislation
for all the reasons mentioned in previous testimony. But more than
that, the coalition urged committee members to take a more active
role in educating their colleagues, both in the senate and in the
house about the importance of this legislation. This is not the
time for posturing about "no new taxes". The public overwhelmingly
supports this legislation, including most smokers in Alaska.
MS. HOLEN stated that smoking is the leading cause of death in
Alaska, and our children are becoming addicted to nicotine in
record numbers. The health and economic impacts of tobacco use on
society are enormous. We have seen news stories for the last
several days about how one legislator in particular thinks tobacco
taxes are unfair. Ms. Holen asked, "Is it fair that non-smokers in
this country pay 75% of all government expenditures for smoking-
related health care?" In Alaska, smoking creates a drain on the
economy of almost $300,000,000.00 per year. We all feel that
impact, whether we're aware of it or not.
TAPE 96-20, SIDE B
MS. HOLEN stated there is no good reason to oppose a tobacco tax
increase, and every reason to support it.
Number 585
ERIK MYERS, testifying from Anchorage, stated there is a strong
case to be made for increasing taxes on tobacco products. He
thinks it is the right of adults to make informed choices, but a
fourteen-year-old, seduced by multi-billion dollar media campaigns
are not making informed choices. Committee members have heard the
statistics: adults don't start smoking, kids start smoking. The
facts are not in dispute: it is abundantly clear that significant
tax increases will save lives. There are very few opportunities
public officials have to take an action that will save lives. If
you take action and support this measure, there will be a
significant number of lives saved as a result of that action.
Failure to take action on this measure, which has been endorsed by
Republican administrations on the national level, by the Hickel
administration in the past, and with other multi-partisan support,
perpetuates the ongoing predation by the tobacco industry on
children. He hopes the legislature will move promptly on this
legislation.
Number 550
ANNETTE MARLEY, Alaska Native Health Board, supports SB 210, SB
234, and HB 431. Ms. Marley works for the Trampling Tobacco
Project at the Alaska Native Health Board. She sees these bills as
the most essential health measure that could be taken to reduce the
ravaging results of tobacco use on Alaskans' health. Ms. Marley
gave a brief history of tobacco use by Alaska Natives. She stated
that more than one-third of Alaska Native deaths are attributable
to tobacco use. This loss of life is in part due to the
artificially low price of tobacco. It is believed that with a
dollar increase on each pack of cigarettes, 32% of Alaskan teens
who smoke will be spared a tobacco-related death. She asked
legislators to not continue to allow kids' lives to be traded in
for tobacco. She, and 74% of Alaskans urge legislators to vote for
SB 210 and SB 234.
Number 523
EMILY LARSON, American Cancer Society, stated that in her years as
a volunteer, she has seen a lot of unnecessary suffering. In the
past four years, she has lost two siblings from lung disease. It
is a deadly disease, and we need to get serious about doing
something about this. She sees this as a health issue, with any
money being raised simply a bonus. She asked legislators to
consider the legislation.
Number 508
DIANA KUHNS, Executive Vice-President, American Cancer Society,
stated the American Cancer Society conducted a poll last January.
That poll found that 75% of the respondents of the poll stated they
support tobacco taxes. Of respondents who were smokers, 55%
support the tax. So the society is present in support of SB 210.
Each day, over 3,000 children become regular smokers. If we look
into the future, 30 of these 3,000 children will be murdered, 60
will die in car accidents, and 750 will be killed by tobacco. She
stated that legislators' support of SB 210 would be greatly
appreciated.
CHAIRMAN SHARP entered into the record written testimony from Ms.
McCabe dated 3/14/96:
Dear Senator Sharp:
This is to ask your support of legislation increasing tobacco
taxes.
I view this legislation more as a health measure - a significant
step towards disease prevention - than as a form of taxation and
revenue. Increasing the cost of cigarettes will help discourage
young people from starting to smoke, and will protect those who are
most vulnerable to a proven health hazard.
Increased taxation in this case is fully justified. Smoking
creates major social costs, and the revenue generated by the
increase would at least begin to cover those costs.
Sincerely, Janet W. McCabe.
Number 485
BENJAMIN S. STEELE supports increasing tobacco taxes. He stated he
is an ex-smoker, and it has been quite hard quitting. Mr. Steele
stated his father smoked until he had a heart attack. He thinks
these bills are one of the best things they can do for the state,
and for his family.
Number 475
CURT BODENMENDER informed the committee he started smoking as a
child, not unlike the majority - 90% - who start before the age of
19. He started smoking at the age of 14 because of the image he
wanted to create and because of the easy availability. It was
inexpensive: one pack cost about the same as two cans of pop. It
did not take long before he became dependant on tobacco, and soon
he needed to smoke to feel normal and get along in every-day
situations.
MR. BODENMENDER stated once he began smoking, it took him about
three years to decide to quit, then seven more years to actually
quit. So he wasn't surprised to hear that 70% of smokers want to
quit, but only 2.5% quit within any given year. He can't recall
exactly how many times he's tried to quit, but in the last year,
it's been at least five times. Mr. Bodenmender stated he quit
again seven weeks ago. He quit because he doesn't want to be
controlled by a substance and wants to be at his full capacity, and
because he doesn't want to die prematurely. He did not quit
because he stopped craving tobacco. The physical and psychological
urges are still there. His situation is not unique, and he is sure
that every ex-smoker wishes there was something that would have
kept them from starting, and that is why he is testifying in favor
of increasing tobacco taxes. He believes this tax will greatly
decrease the number of people who have to go through the pain of
quitting, or worse, the hopelessness of not quitting. He believes
this will drastically cut the number of kids who start using
tobacco, and subsequently the number of adults who daily battle
their simultaneous craving for tobacco and the grave need to stop.
Number 433
STACY GOADE, Staff, Seven Circles Coalition, stated that some
people think if more education occurs, they can stop cigarette
smoking. She doesn't see that happening. There are many education
and smoking cessation programs, but they are still seeing increases
in the number of smoking youth. We would like to reduce youth
access to tobacco products in the stores. We would like to
advocate for tobacco tax increases. We want to educate youth about
tobacco advertising: it's extremely powerful. The network also
believes that this tax legislation is of a health benefit, not so
much a tax, but a disincentive to use of tobacco. It isn't really
a tax, because we pay higher taxes in the long run for health-care
costs related to tobacco illness and death. As elected officials,
you can view this as a win-win-win solution. The Alaska Federation
of Natives (AFN) passed a resolution in support of increasing the
tobacco tax. Nearly twice the number of Alaska Native men and
women are dying from smoking cigarettes, compared to their
counterparts in this state. She thinks that a tax would reduce use
throughout the state.
CHAIRMAN SHARP stated the committee appreciates the broad range and
diversity of testimony that has been given today. He stated he
looks forward to progress on these bills. The chairman stated the
committee would move on to the next item on the agenda.
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