 Measure by Rep. Lisa Murkowski Raises About $20 Million a Year July 04, 2002
"This reasonable, responsible and realistic increase in Alaska's alcohol taxes is long overdue," Knowles said as he signed the bill in his Anchorage office before an audience of anti-alcohol abuse advocates. "It is time Alaskans stepped up the fight against alcohol abuse. It is time we help people who want to stop drinking and protect the public from those who refuse to stop drinking. It is time to ask consumers to help contribute more of the share of the costs of dealing with problem drinkers." Sponsored by Rep. Lisa Murkowski, R-Anchorage, the bill increases the wholesale tax on alcoholic beverages to about 10 cents a drink on a 12-ounce beer, a 5-ounce glass of wine or a 1-ounce shot of hard liquor. The new rates take effect October 1, replacing the 1983 tax rates that averaged 3 to 4 cents per drink. The Department of Revenue estimates the new tax rates will generate an additional $20 million a year in revenue to the state. The existing rates produce about $12 million a year for the state. Until the 1983 alcohol tax increase, Alaska had not raised its tax rate on alcohol since 1961. Alcohol abuse costs the Alaska economy more than $450 million a year in criminal justice and protective services, health care and public assistance, traffic accidents and lost productivity, according to a November 2001 report by for the Governor's Advisory Board on Alcoholism and Drug Abuse. Health care costs alone totaled $48 million, with $44 million going toward adult and child protective services attributed to alcohol and other drug abuse in Alaska. The National Institute on Alcohol Abuse and Alcoholism reported last year that research shows alcoholic consumption declines when prices rise. The Center for Science in the Public Interest says higher prices help reduce abusive consumption, especially among young people. According to the news release, a study by the National Bureau of Economic Research concluded: "even a modest tax increase of 30 cents for a bottle of liquor and 10 cents for a six-pack of beer would decrease drinking among young people as much as raising the drinking age by one year." Alaska's constitutional prohibition against dedicated revenues means there is no written guarantee the new revenue will go toward alcoholism treatment and prevention programs, the governor noted. However, he said he knows that Alaska's next governor and future legislators will do their best to make sure these important programs receive the funding they need. During this year's legislative session, Knowles supported the alcohol tax increase as one of the elements in a sustainable budget plan. Unfortunately, it was the only element that passed the Legislature. The legislative majority in the state Senate killed the other provisions that were passed by the House. Because the bill did not include an effective date clause, it takes effect 90 days after the Governor signs it into law. The effective date is therefore October 1, 2002.
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