Senate OKs $2-per-pack state tax on cigarettes

Posted: Friday, April 30, 2004

The state Senate has approved a bill that would double the tax on cigarettes to $2 a pack. The bill approved Thursday would boost the tax on other tobacco products from 75 percent to 100 percent of the wholesale cost.

Republican Gov. Frank Murkowski is pushing the bill, which administration officials say would raise about $35.5 million a year for state government.

Sen. Con Bunde, R-Anchorage, said people have asked if the measure is a health bill or a revenue bill.

"I'm pleased to say 'yes,'" Bunde said. He predicted it would discourage Alaskans from smoking, as well as raise money for the state.

Sen. Lyman Hoffman, D-Bethel, tried to amend the bill to say the Legislature intends for 20 percent of the new money to be spent on programs to help people stop smoking or prevent them from starting.

That would boost direct state spending on those efforts to about $12 million a year, which Hoffman said is still less than $16.5 million the federal Centers for Disease Control and Prevention recommends for Alaska.

Bunde argued against that, saying the Legislature should be free to spend the money where it sees fit.

"If we do this, we're taking money away from schools, where hopefully they do teach health and science," Bunde said.

Hoffman's amendment failed, but the bill itself passed 14-5. Sens. Hoffman; Lyda Green, R-Wasilla; Gene Therriault, R-North Pole; and Tom Wagoner, R-Kenai, cast 'no' votes. Sen. Ralph Seekins, R-Fairbanks, was absent.

The bill now goes to the House, where Speaker Pete Kott, R-Eagle River, said it has probably a 50-50 chance of passing.

Kott and other House leaders said the bill's chances of success go down if it's the only revenue-raising bill in play.

They say the $35.5 million raised would do little to plug the state's chronic budget deficit, which is expected to reach $786 million by the 2007 fiscal year.

"People could make the accusation that it's a joke, compared to the fiscal needs of Alaska," said House Majority Leader John Coghill, R-North Pole. "It would be a toothpick to prop the state up."

Kott said he would be more likely to support the tobacco tax bill if it's part of a package that could also include a sales tax or employment tax.



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