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Proposed alcohol, tobacco tax increases get first Alaska Senate hearings

  • Author: Suzanna Caldwell
  • Updated: September 28, 2016
  • Published February 16, 2016

The Alaska Senate Labor and Finance committee held hearings Tuesday on two bills that could double alcohol taxes and increase tobacco taxes.

Senate Bill 131 would double the wholesale tax rate of beer, wine and liquor. Senate Bill 133 would increase the tax rate by 5 cents per cigarette and on other tobacco products from 75 percent of the wholesale price to 100 percent. Both bills were introduced by the governor's office.

Alaska Tax Division Deputy Director Brandon Spanos told legislators the current alcohol tax amounts to about 10 cents per drink -- defined as 1 ounce of spirits, 12 ounces of beer or 5 ounces of wine. Small brewers, which include all Alaska breweries, already have an exemption that allows them to pay 35 cents per gallon, or about 3 cents per beer. Their rate would also double under the proposed bill.

The two bills are part of the governor's package to raise revenues across the board. Division Director Ken Alper noted the proposed alcohol tax is estimated to raise $40 million a year in revenue and the tobacco tax about $29 million, or about 1 percent of the current deficit.

"(The bills) were put together with the broad idea of solving the problem in total," Alper testified. "There was no intention to single out any demographic or user group."

All who testified Tuesday afternoon spoke out against the proposed increase. Many, including the tax division, noted Alaska already has the highest tax rate in the nation for wine and the second highest for beer and liquor.

Joel Kadarauch, general manager of Odom Corp., a beer and wine distributor, testified in opposition. He said while Alaskans overall bear a low tax burden, that doesn't apply to the alcohol industry.

"(This bill) paints a broad brush that fails to recognize that the tax burden is already high," he said. "This disproportionately increases a burden to an already overburdened industry."

Committee testimony on both bills was set to continue Tuesday evening.

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