Alcohol tax plan tossed

Measures to raise killed in court

Posted: Friday, March 03, 2000

Joe Sixpack won't be paying an extra $1.50 in taxes for his namesake anytime soon.

The ballot summary for an initiative that would up Alaska's tax on alcoholic beverages was misleading, an Anchorage judge said earlier this week.

The wording, ruled Anchorage Superior Court Judge Karen Hunt, didn't make it clear just how high a tax would be if the initiative was approved by voters and became law.

But Hunt also ruled that initiatives could be used to raise taxes.

``Now we're going to have to go out and start over,'' said Matt Felix, one of the initiative's sponsors. ``We got the signatures once, we'll get them again.''

After initiative backers turned in the required number of signatures to get the measure on the ballot, the state Department of Law wrote up a ballot summary, which was subsequently approved by Lt. Gov. Fran Ulmer. Ulmer certified the initiative, and was promptly taken to court by the tax opponents.

The wording of the summary mentioned a tax increase, but didn't say how much it would be, which Hunt said was misleading. ``The key to a tax increase is the proposed amount of the increase,'' she wrote.

Opponents of the proposed initiative wanted the courts to kill it on the grounds it was misleading and that a tax was a legislative power and couldn't be imposed through an initiative.

Associated with the plaintiff's side of the case were the Alaska Restaurant and Beverage Association, the Alaska Cabaret, Hotel, Restaurant and Retailers Association, and the Alaska Wine and Spirit Wholesalers Association.

Judge Hunt agreed the state's summary of the initiative didn't provide enough details, but she also said an initiative-initiated tax was just fine under Alaska's constitution.

John Lindback, chief of staff for Ulmer, said state lawyers are reviewing Hunt's decision. An appeal may be on the way, he said.

Lindback said though the amount of the tax wasn't included in the summary, state law would have included those amounts on the ballot anyway. He wasn't sure if the judge considered that.

The initiative would make the tax on beer with less than 21 percent alcohol $3.02 per gallon. Wine and other drinks with less than 21 percent alcohol would be taxed at $7.25 per gallon, with high-alcohol drinks being taxed at $37.60 per gallon.

Karen Rogina, executive vice president for the Alaska Hospitality Alliance, said there was more that was misleading about the initiative than the issues addressed by the judge.

The tax, which would be collected at a wholesale level, wouldn't be used to address alcohol-related problems as the sponsors hoped, she said. The money would go into the state's general fund. From there, it can be spent on just about anything, and it probably would be, she said.

``The whole impetus behind this excise tax is flawed,'' Rogina said. ``It is highly unlikely that the money would go toward anti-alcohol programs.''

Felix, one of three sponsors of the initiative, said the sponsors shouldn't have a problem getting the required signatures again, and he wasn't looking to get the initiative on the ballot until 2002 anyway.

The good side of the ruling, he said, is that Hunt decided it's OK to raise taxes through the initiative process. That right had been in doubt before the ruling, he said.

Higher taxes on alcohol, Felix said, are needed to help cover the cost of alcohol-related child protection, prison and health-care costs. He said state studies estimate that annual cost at near $250 million. Current state taxes bring in about $12 million, Felix said.

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