by Phillip Manning ~ September 26th, 2013
By: Melis Coady
On July 16th the borough assembly adopted Ordinance 13-089- a piece of legislation intended to diversify revenue sources for the borough. The ordinance proposed a 5% excise tax on the sale of alcoholic beverages in the borough and put the option to voters.
Talkeetna resident and managing partner of Denali Brewing Company Sassan Mossanen says he is opposed to the tax. He points out that for over 10 years taxes on alcoholic beverages in Alaska have already been some of the highest in the country. That can make it hard for a small batch brewery like his to compete when he already pays $1.07 gallon in excise tax on beer whereas Colorado breweries are paying 8-cents a gallon on their brews. Denali Brewing pays excise rates over one thousand times higher than it’s competitors at the tap.
Marne Gunderson, manager at the Fairview Inn, is suspicious of the tax. As drafted in the original ordinance “revenues resulting from the imposition and collection of the tax shall be allocated to education or the other area wide operations of the department of emergency services.” In truth all borough revenue goes into a general fund that is subjected annually to a budget appropriations process by the borough mayor and the assembly.
Dale Fox, President and CEO of the Alaska Cabaret, Hotel, Restaurant and Retailer’s Association goes a step further in his criticism of the proposed tax and calls it “a tax on the working man” and “a crazy idea.” He is an advocate for Alaska’s alcohol industry and boasts developing breweries and restaurants as a vibrant part of Alaska’s economy. He encourages Alaskan voters to vote “no” on proposition 1. He sympathizes with Alaska’s alcohol retailers that pay 5-6 times the national average in excise tax.
Mr. Fox said in 2002 he was hopeful, when the state levied the highest alcohol excise taxes in the nation, that politicians would earmark revenues from the tax to pay for rehabilitation, detoxification programs and aim to reduce the fetal alcohol syndrome in Alaska. He said at the state level funding for those programs have gone down almost every year since the tax’s inception. He is also suspicious of the motivation of the Mat-Su health foundation, a nonprofit arm of Mat-Su regional hospital, to spend $50,000 to hire a Seattle public relations firm to convince Mat Su voters to support proposition 1. He believes that it is a conflict of interest because the hospital receives borough funding.
The Mat-Su health foundation is a big proponent of the proposed borough tax. After completing an extensive community survey in 2013- they cite alcohol related health problems as a major community concern and point to research that directly links the cost of alcohol to reduced consumption. In the executive summary of their survey they state that alcohol and substance abuse leads to 11-alcohol induced deaths each year and accounts for 22% of injuries requiring hospitalization each year in the Mat Su borough. They also found that alcohol and substance abuse was a leading source of stress and worry for families.
The Mat Su Health foundation’s white paper on the subject of the alcohol tax references 12 studies linking alcohol taxation to reduced alcohol related morbidity and mortality, child abuse, domestic violence, negative birth outcomes, loss of productivity, sexually transmitted diseases, and youth alcohol consumption.
The Anchorage Daily News recently published an article citing the contrary. That despite high taxes on alcohol in Alaska that consumption has gone up. Reporter Kyle Hopkins found that by reviewing state tax records that sale of liquor has gone up 41% and the sale of wine has gone up 56% despite the doubling and tripling of the excise tax in 2002. That is a rate far higher than can be explained by the state’s 13% population growth.
What isn’t teased out by looking at state tax records is who is doing all the drinking. Proponents of the “sin tax” say the tax burden is fair and hits binge and heavy drinkers the hardest because they are doing the most drinking.
One of the most disturbing pieces of data released by the Mat Su health foundation are the results of the Mat Su Borough’s 2011 Youth Risk Behavior Survey. It found 15% of traditional high school students and over 35% of alternative high school students are binge drinkers, consuming 4 or more drinks in a sitting. In that same year a study by the Pacific Institute for research and evaluation found that almost 18% of alcohol sold in the state was consumed by youth.
Sassan Mossanen remains confused. “Not in my restaurant,” he says. Twister Creek has no violations of serving underage drinkers. Since it is illegal for people under 21 years old to purchase alcohol he is unsure how charging retailers and brewers is a solution.
Registered voters can weigh in on proposition 1 on Tuesday, October 1st. Polls at the Talkeetna Elementary School will be open from 7am to 8pm.