Alcohol tax may dry up, lacks support

Posted: Tuesday, March 26, 2002

JUNEAU -- A bill to increase the state's alcohol tax by a dime a drink may be on the rocks in the House.

House Finance Committee co-chair Eldon Mulder said Monday that the bill takes too big a bite out of the liquor industry.

Mulder, a Republican from Anchorage, said he supports an increase in the state's 3 cent-per-drink alcohol tax. ''But not at the level it is now,'' he said.

''A 300 percent increase in the alcohol tax is pretty steep,'' Mulder said.

The measure is sponsored by Rep. Lisa Murkowski, R-Anchorage. It would increase the tax on beer, wine and spirits.

House Bill 225 sits in House Finance, where a similar measure was voted down on Monday as part of a larger tax package.

Murkowski proposes increasing the excise tax on alcohol by about 10 cents per drink, raising it to 13 cents per drink on beer and wine and 14 cents a drink on hard liquor.

Mulder said Monday that a 5-cent per drink increase in the alcohol tax would be more appropriate. He said a nickel a drink increase would satisfy both business interests and advocates who favor an increase.

During committee action on Monday, Mulder voted to impose a 3 percent statewide sales tax that could increase the tax on some alcoholic beverages more than would Murkowski's proposal.

But the tax affects consumers rather than wholesale retailers, who would be exempt from a sales tax under the plan approved Monday, said Denny DeWitt, an aide to Mulder.

Alaska's alcohol tax has not been raised in 18 years and a dime-a-drink increase would make it among the highest in the nation, Murkowski said in a sponsor's statement.

But supporters of the measure say Alaska is also a national leaders in incidents of fetal alcohol syndrome and in alcohol-related deaths. Alcohol-related deaths in rural Alaska are seven times the national average, the statement said.

Supporters also note that the state's excise tax on alcohol does not raise enough money to pay for the cost of alcohol abuse to state government.

Alcohol abuse costs the state's economy about $453 million annually, according to a 2001 study by the McDowell Group. The study estimated the cost to state government -- both to the legal system and public assistance -- is about $150 million a year.

The study was commissioned by the state Department of Health and Social Services advisory board on alcohol and drug abuse.

The state's alcohol tax raises about $12 million annually and Murkowski's increase would bring that to about $34 million.

Murkowski said it would be irresponsible for lawmakers not to increase the state's alcohol tax.

She plans to try to get her bill voted out of the House Finance Committee or have an amendment offered on the House floor to increase the tax.

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