Legislature(2015 - 2016)BELTZ 105 (TSBldg)
02/16/2016 06:00 PM Senate LABOR & COMMERCE
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SB 133-ELECTRNC TAX RETURNS;TOBACCO & E-CIGS TAX CHAIR COSTELLO announced the committee would hear public testimony on SB 133. 6:02:53 PM JACKSON BLACKWELL, high school student representing the American Cancer Society Cancer Action Network (ASC CAN), testified in support of SB 133. He reported that he has been involved in tobacco prevention for three years and feels it is important to do everything possible to protect the health of his peers by keeping electronic cigarettes out of their hands. He related that when he returned after spending six months serving as a U.S. page in Washington, D.C., he saw that the use of e- cigarettes and vapes had skyrocketed. He concluded saying the tobacco tax would be beneficial because it would make e- cigarettes more difficult to acquire. 6:03:06 PM SENATOR MEYER joined the committee. JOSEPH YOULKOSKI, eighth grade student representing the American Cancer Society Cancer Action Network (ASC CAN), testified in support of SB 133. He said the increased tobacco tax would make it harder for middle school students to get vapor and e- cigarettes. It will keep the state healthier and generate revenue. SENATOR STEVENS asked if anyone uses e-cigarettes to stop an addiction to combustible cigarettes. MR. BLACKWELL replied some people use them as a means to quit smoking, but his perspective is that it creates an addiction to something else. He pointed out that e-cigarettes are not regulated so people could still be buying a nicotine product without knowing it. He reiterated that they shouldn't be readily available for anyone to use. 6:06:28 PM SENATOR MEYER asked what the tobacco of choice is in schools now days. MR. BLACKWELL replied he primarily sees the use of vapes, e- cigarettes and chewing tobacco, often by students he would not expect. 6:07:27 PM MR. YOULKOSKI said kids have been educated through programs like DARE that nicotine products are harmful so they've switched to e-cigarettes and vapes. Those claim to be tobacco and nicotine free and he wonders what they do contain. SENATOR MEYER commented on the problem in Anchorage with Spice and the lack of package labeling. He asked the students if they agree that that is part of the problem. MR. BLACKWELL pointed out that some people are using vaping devices to smoke hash oil and opioids, which presents a whole new danger. MR. YOULKOSKI added that his middle school doesn't have many problems with Spice and he attributes it to good education from teachers about its dangers. 6:08:43 PM STEVEN MAPES, representing himself, Kenai, Alaska, asked the committee to amend SB 133 to remove all vapor products from the bill. He stated that he is speaking as an ex-smoker, former e- cigarette user and current vape shop owner. He shared his story of trying to kick the habit of smoking three packs of cigarettes per day. The only thing that worked for him was e-cigarettes so he decided to open a vape shop and help others get off tobacco. He described the success of his business and the fact that he has been able to help hundreds of people to stop using tobacco products. Increasing the tax on tobacco as proposed would put him out of business and drive the market to the Internet. 6:11:44 PM At ease 6:12:25 PM CHAIR COSTELLO reconvened the meeting. PATRICIA PATTERSON, Lucky Raven Tobacco, Kenai, Alaska, testified in opposition to SB 133. She said there is no federal or state law that prohibits an Alaskan from buying pipe tobacco, cigars or vape products online, and the 75 percent state tax isn't levied on those sales. That is her competitor. She pointed out that there are just three humidors left in the state and increasing the 75 percent tax to 100 percent will get rid of all three. She opined that the current 75 percent tax has done nothing but move business to other states. She posited that the same thing will happen to in-state e-cigarette and vape shops if those products are included in the tax scheme. The revenue the state would gain is insignificant compared to the damage it will do to local economies throughout the state. 6:14:48 PM LARRY HACKENMILLER, representing himself, Fairbanks, Alaska, testified in opposition to SB 133. He stated total opposition to taxing electronic smoking devices, maintaining that they have nothing to do with cigarettes or tobacco products. He said no concrete research shows hazards associated with the use of this device or its benefit as a means to quit smoking tobacco. He also requested the committee remove the requirement to file tax forms electronically and instead state it is the preferred method. CHARLES RIVERUP, representing himself, Fairbanks, Alaska, testified in opposition to SB 133. He offered his belief that vape products are not tobacco and should not be taxed as such. He and others purchase their vape products locally and the proposed tax would send this business outside the state. "That doesn't seem logical to me," he said. 6:18:34 PM ANGELA CARROL, Smoke Free Alternative Trade Association, Wasilla, Alaska, requested the committee amend SB 133 to remove all vapor products from the bill. She referred to reports in the bill packets from the Mayo Clinic and Public Health England that discuss how vapor products benefit adults addicted to cigarettes. She pointed out that the proposed tax on these products would bring the tax on vapor products from zero to 100 percent overnight, which will be a huge burden to the consumer. She maintained that the proposed tax will drive consumers back to combustible cigarettes, deter a current smoker from switching to a vapor product or drive sales to the Internet. This won't be good for the economy or selective businesses in Alaska. 6:21:04 PM KAREN PERDUE, representing herself, Fairbanks, Alaska, said she is retired and working with the American Cancer Society Alaska Cancer Action Network, and is speaking in support of SB 133. She informed the committee that she was involved in the 1997 initial tobacco tax increase when an amazing bi-partisan effort resulted in Alaska having the highest tobacco tax in nation. The tax had a dramatic effect on consumption; in particular, youth consumption has gone down 70 percent since then. She asked the committee to make sure that e-cigarettes are taxed to help ensure that young people do not start using them. She highlighted that current data shows that far more young people are using those products than tobacco. Responding to a question, she confirmed that this information is from the Behavioral Risk Survey. She said the track record is great for using the tobacco tax for public health purposes rather than revenue purposes, and tobacco advocates would like to see the additional tax focused on reducing consumption. MS. PERDUE said the use of e-cigarettes has exploded in the Fairbanks community and it makes no sense to exclude them from taxation. They're a medium for delivery of both tobacco and marijuana and those products already are or will be taxed. 6:24:35 PM SENATOR STEVENS mentioned a bill he introduced intended to keep children from buying e-cigarettes. In the process, he learned that a young person who is addicted to cigarettes can get a prescription for e-cigarettes to help break the addiction. He asked if this is a legitimate way to help people stop smoking and, if so, why charge them more. MS. PERDUE replied the policy is to tax tobacco and she views e- cigarettes as a delivery mechanism for tobacco and other products. She added that it's one thing if someone actually quits using tobacco altogether but the nicotine levels in e- cigarettes could be higher than a combustible cigarette because they aren't currently regulated by the FDA. 6:26:35 PM TERRENCE ROBBINS, representing himself, Ketchikan, Alaska, testified in support of SB 133. He cited U.S. surgeon general findings that every 7 percent increase in the retail price of cigarettes will result in 7 percent reduction in youth smoking rates. He also mentioned data from 2015 showing that 27.5 percent of Alaskans age 12-17 have used cigarettes or e- cigarettes in the last 30 days. He said e-cigarettes are a nicotine product and increasing their retail price will decrease use rates among youths. 6:29:42 PM DR. KRISTEN COX, ND, representing herself, Juneau, Alaska, testified in support of SB 133. She said in 2014 the State of Alaska collected $100 million between tobacco taxes and the Tobacco Master Settlement Agreement. However, the costs associated with smoking in Alaska totals $600 million. She pointed out that these costs equate to $20 per pack of cigarettes which arguably means the state is essentially subsidizing the tobacco industry. Clearly, increasing the cost of cigarettes decreases use rates in youths, she said. Even Phillip Morris recognized this in a 1988 statement. CHAIR COSTELLO asked Dr. Cox to provide the backup for the $600 million she cited. DR. COX said the data came from the Department of Health and Social Services data from the Tobacco Prevention and Control Program. She offered to leave her copy. 6:32:23 PM MARGE STONEKING, Executive Director, American Lung Association in Alaska, Anchorage, Alaska, testified in support of SB 133. Reading from prepared testimony she stated that tobacco taxes are a proven method to reduce tobacco use and tobacco related illnesses. Increasing these taxis also saves government and businesses millions of dollars in tobacco-related healthcare costs. She reported that increasing tobacco taxes 10 percent reduces youth smoking by a minimum of 7 percent, reduces adult smoking by 4 percent, and reduces pregnant women smoking by 7 percent. A vast majority of people who smoke want to quit and the increased price is yet another incentive to quit. Thus, the American Lung Association supports the proposal to increase the price of cigarettes a minimum of $1 per pack and the equivalent increase on other tobacco products, including electronic cigarettes. MS. STONEKING highlighted that there are seven approved products for tobacco cessation and e-cigarettes are not one of them. In fact, the tobacco industry sued the FDA to treat these devices as a tobacco product, not as a cessation device. She also suggested that e-cigarette venders should have a tobacco endorsement so they'll be part of the state's underage enforcement program. 6:36:12 PM ISAAC HEWELL, owner, Cold Vapes 907, Anchorage, Alaska, testified in opposition to SB 133. He listed his family run business, employees, rent, insurance and ancillary businesses, all of which would be affected if the bill were to pass and become law. He described the bill as an unemployment bill for the vaping industry in Alaska because it will drive sales to the Internet. He maintained that an estimated 9 million smokers, including himself, have switched from combustible tobacco products to vaping. He urged the committee to hold the bill so the state can continue to profit from his business as it does now. 6:38:47 PM JEFF FUHRMAN, representing himself, Anchorage, Alaska, testified in opposition to SB 133. He shared personal stories about cigarette smoking and lung cancer and related that he was initially skeptical about vaping. However, he has not touched a cigarette since he started to vape 3.5 years ago. He maintained that the effect of SB 133 will be to close small businesses in Alaska and drive the consumers to online sales. Furthermore, it will make it more difficult for people like him to quit smoking. It's reprehensible that the state is increasing the cost of a device that is helping people quit and saving lives, he said. 6:42:02 PM JASON JONES, owner, Legion Vapor, Anchorage, Alaska, testified in opposition to SB 133. He related that after 17 years and multiple failed attempts to stop smoking cigarettes, he turned to vaporizers and was finally successful. That was three years ago and he's still smoke free. Speaking as a vape shop owner, he stressed that taxing vaporizer products will not create revenue for the state because it will drive consumers to purchase online. The result will be that the 20 locally-owned, family vape shops in Alaska will be forced to close. An unintended consequence is that it will remove the first line of defense in keeping vaporizer products out of the hands of children. 6:43:40 PM TOM LAKOSH, representing himself, Anchorage, Alaska, testified in support of sin taxes and suggested adding the consumption and production of fossil fuels to both SB 131 and SB 133. He also described the proposed tax on vaping products as "quite a cost to bear." 6:45:27 PM SHEB GARFIELD, representing himself, Anchorage, Alaska, testified in opposition to SB 133. He stated that after smoking for 20 years, he's been cigarette-free for 3 years, and he owes that healthy achievement to vaping. He stressed that the 100 percent wholesale tax will start a domino effect that will end the cottage vaping industry in Alaska. Consumers will be forced to shop online or go back to smoking. Either circumstance will cause the 20 mom-and-pop vape shops in Alaska to cut employees and eventually close. The State of Alaska is shooting itself in the foot in its decision to tax vaping products when it's a proven method for helping people to quit smoking, he said. 6:47:40 PM GREGORY CONLEY, American Vaping Association, Medford, New Jersey, testified in opposition to SB 133. He related that he is an ex-smoker and attorney who has been advocating for sound policies for vapor products for more than 5 years. He discussed the public health impacts of vapor products and the ongoing debate within the tobacco control community. He cited a Center for Disease Control and Prevention (CDC) survey that found that 22 percent of the adults who claimed to have quit smoking in the past year are using vapor products. Regardless of whether people approve, this is what is happening, he said. Turning to the question of vaping use among youth, he pointed to the short summary issued by Ohio Attorney General, Tom Miller, and urged a smart review of the numbers. They show that only 2 percent of American youths are using vapor products more than 20 days of the month. Other surveys found that 60-80 percent of youth that report using vapor products in the last month are using a non-nicotine product. He suggested the committee keep the numbers in perspective. 6:50:18 PM ALEX MCDONALD, Ice Fog Vapor, Inc., Fairbanks, Alaska, testified in opposition to including vapor products in SB 133. He related how vapor products helped end his 19-year tobacco addition. He maintained that the tax proposed on vapor products is different than on tobacco products because the former are readily available for purchase on the Internet. It will be impossible for small family-owned businesses to compete with that market. Furthermore, online vendors lack the ability to check IDs to ensure they aren't selling to minors. The vaping industry in Alaska is in full support of SB 141 relating to the sale of vapor products to minors, he said. 6:51:57 PM THOMAS BROWN, representing himself, Anchorage, Alaska, testified that he opposes SB 133 for a number of reasons. First, vaping is a healthy alternative to combustible tobacco. This is evidenced by documents he intends to provide to the committee. Second, as vaping goes up smoking goes down. This is true for every age range so the behavior should be promoted. Third, SB 133 will harm Alaskan businesses and jobs. The tax will cause consumers to turn to the Internet or the black market. Fourth, the unintended consequence of increasing sin taxes is that revenue goes down. This bill will cause more people to smoke, cost Alaskans jobs, and create a new class of criminals. Nothing about the bill is desirable, he said. 6:54:14 PM FRED STURMAN, representing himself, Kenai, Alaska, stated that he opposes taxes of any description until the legislature cuts at least 30 percent from the budget. He highlighted that Ruby Hines sent suggestions for cutting the budget in 14 places and he's aware of no cuts thus far. He suggested punitive measures to ensure this is done. CHAIR COSTELLO, finding no further comments on SB 133, closed public testimony and held the bill in committee.