Alaska: Gov. Walker proposes bill that doubles state’s alcohol tax

Source: News Miner

Matt Buxton

February 11, 2016

Another tax proposal, another hearing where legislators are left wondering about its economic impacts.

This time it was the House Labor and Commerce Committee that found itself frustrated when reviewing House Bill 248, a bill that would double the state’s tax on alcohol.

The bill, put forward by Gov. Bill Walker as one of a myriad of proposals to help cover the multi-billion-dollar gulf between the state’s income and spending, would increase the tax on an alcohol from 10 cents to 20 cents per drink.

According to the presentation given to the committee on Wednesday, if enacted the tax would be $2.14 on a gallon of beer, cider or malt beveraage, $5 for a gallon wine and $25.60 for a gallon of distilled spirits.  [ $60.86 per case / $5.07 per 750ml bottle ]

Small-brewery beer would still enjoy a lower rate for the first 60,000 barrels of beer, with the tax rising from 35 cents to 70 cents per gallon.

But questions about its impact on sellers, consumption and bootlegging went largely unanswered. The state officials said they expected a short-term dip in sales but that sales would return to normal after some time.

“I do find it odd that there was no analysis as far as the economic impact in regard to this revenue bill as well as others,” said Rep. Shelley Hughes, R-Palmer, adding if there had been any thought put toward people resorting to bootlegging in rural Alaska.

Brandon Spanos, the deputy director of the state’s tax division, responded that bootlegging and other social impacts are a concern, but that the key driver behind many of the revenue bills is to fill the budget gap.

“That’s always a concern,” he said, responding to the bootlegging part of Hughes’ question. “The thought that went into the tax bills was closing the budget gap and looking at the revenue impact and that’s what we focused on.”

He went on to point out that with the alcohol tax bill half of the revenue goes into the state’s alcohol abuse treatment and prevention program, about $20 million of the $40 million the higher taxes would collect.

Hughes said overall her concern about the alcohol tax extended to all the other taxes on the table.

“I have less heartburn actually about this than other revenue bills. But I still find it troubling,” she said “The fact that we’re only focusing on how to pay for government and we’re not focused on how it will affect the people and communities of Alaska with all the revenue bills is very concerning.”

Last week the House Transportation Committee found itself frustrated by the lack of analysis done on the impacts of doubling the state’s motor fuel tax.

The department told the committee that it would cost the average driver about $80 more per year, but a greater impact on the cost do deliver goods and on rural Alaska wasn’t available.

Committee Chair Rep. Curt Olson, R-Kenai, commented that the people most impacted by these kinds of taxes won’t know until they’re passed.

“We’ll have everybody coming in to weigh in on it after it’s already passed. . We’re probably going to have more complains about this bill and the extremely modest amount of money that it’s raising” than the oil tax changes, he said. “This’ll be an interesting summer.”

Still, the committee plans to hold an open session for public testimony this weekend. It will be meeting 10 a.m. Saturday to take public testimony. Testimony can be given from any legislative information office in the state, a list of which is available online at akleg.gov.

The Fairbanks Legislative Information Office is located at 1292 Sadler Way, Suite 308, on the third floor of the Alaska USA building. Its number is 452-4448.