Knowles signs alcohol tax increase into law

Posted: Friday, July 05, 2002

JUNEAU (AP) -- The price of libations will increase in Alaska beginning in October under a bill signed into law Wednesday by Gov. Tony Knowles.

The bill increases the tax on liquor to about 10 cents per drink from the present rate of about 3 to 4 cents per drink. The state will begin collecting the tax Oct. 1.

Knowles signed the bill into law during a ceremony in Anchorage attended by state social service officials and advocates of alcohol abuse programs.

The governor said alcohol abuse in Alaska costs the economy more than $450 million annually and he urged future governors and lawmakers to dedicate the new revenues to alcohol treatment programs. The state constitution bars lawmakers from dedicating funds to specific programs.

The measure is expected to raise about $20 million in tax revenues now paid to the state by distributors.

Alaska leads the nation in alcohol-related deaths and percentage of children born with fetal alcohol syndrome, according to state figures.

Alaska's arrest rate for driving under the influence and alcohol-related vehicle fatalities ranks among the highest in the nation.

Knowles said the measure, which is the first increase in the state's alcohol tax since 1983, is long overdue.

''This reasonable, responsible and realistic increase in Alaska's alcohol tax is long overdue,'' Knowles said. ''It is time to ask consumers to help contribute more of the share of the cost of dealing with problem drinkers.''

The measure was sponsored by Rep. Lisa Murkowski, R-Anchorage. Murkowski had sought a dime-a-drink increase in the tax on beer, wine and hard liquor. Murkowski did not attend the event.

Lawmakers approved an increase that amounts to about 7 cents per serving of beer and wine and 6 cents on hard liquor.

Under the tax scheme, distributors will pay about $12.80 on a gallon of whiskey compared to the current $5.60. The tax on wine will jump to $2.50 per gallon from 85 cents. For beer, the tax will rise to $1.07 a gallon from 35 cents.

Supporters of the bill figure that will equate to an across-the-board increase of 10 cents on a 12-ounce serving of beer, a five-ounce serving of wine and a one-ounce shot of hard liquor.

Knowles cited a study by the National Bureau of Economic Research that concluded a 10-cent increase in a six-pack of beer decreases drinking among young people as much as raising the legal drinking age by one year.

The cost of alcohol abuse to the state economy includes criminal justice expenses, health care and public assistance, traffic accidents and lost productivity, according to a report by the Governor's Advisory Board on Alcoholism and Drug Abuse.

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