House considers increase in tax on alcohol

Bill would allow cities to assess matching tax on alcohol sales

Posted: Monday, April 02, 2001

A bill boosting state alcohol excise taxes - and giving municipalities the ability to match it - was introduced in the state House on Friday by Rep. Lisa Murkowski, an Anchorage Republican.

"What I'm coming out with is a 10-cent (per drink) increase over the existing excise tax with an option to the municipalities to collect an additional 10 cents," Murkowski said.

The state would collect the money on behalf of municipalities who assessed it, much the way it does with fish taxes in coastal communities.

The concept brought a quick reaction from the Cabaret, Hotel and Restaurant Retail Association, which has said it supports a "reasonable" alcohol tax increase.

Executive Director Kace McDowell said Murkowski's bill would increase the tax 228.6 percent on liquor, 301 percent on wine and 305.7 percent on beer, not counting any municipal collections.

"A 300 percent increase is not reasonable," McDowell said.

House Speaker Brian Porter referred House Bill 225 to just two committees, Labor and Commerce, chaired by Murkowski, and Finance.

The state spends $250 million annually to combat the direct effects of alcohol abuse, Murkowski said, for prevention, treatment, law enforcement, courts, corrections, social services and other costs. The figure does not include indirect costs, such as schools dealing with children affected by fetal alcohol syndrome or fetal alcohol effects.

"There is no offset, currently," Murkowski said, because the alcohol tax, unchanged since 1983, generates just $12 million. She estimates the increase would bring in $33 million.

Fellow legislators are proposing measures to deal with driving-related alcohol problems such as lowering the blood-alcohol level at which a person is considered too drunk to drive. Additional alcohol taxes could pay for measures under consideration such as a therapeutic court for perennial offenders who do not respond to traditional measures in the judicial system, Murkowski said.

"We're going to use and consume alcohol in this state," Murkowski said. "We're going to have to pay a little more."

Murkowski said she expects strong opposition from the liquor industry. Rep. Pete Kott, an Eagle River Republican, met with industry leaders earlier this year to discuss a tax increase, she said.

"There was no meeting of the minds in terms of what might be reasonable," she said.

As for majority legislators who generally oppose new taxes, "I'm going to remind them that this is not a new tax," Murkowski said. "It's an existing tax."

McDowell of CHARR said Murkowski's bill would jump Alaska to No. 1 in the nation in alcohol taxes.

"We don't feel any other industry would be taxed at this level," she said.

McDowell also said the 10 cents-per-drink figure was misleading. The bill would increase the beer tax from 35 cents to $1.42 per gallon, wine tax from 85 cents to $3.41 per gallon, and hard liquor from $5.60 to $18.40 per gallon.

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