22nd Alaska State Legislature
Representative Lisa Murkowski

Portrait of Representative Lisa Murkowski, 91.46k. Session:
State Capitol, Room 408
Juneau, AK 99801-1182
Phone: (907) 465-3783
Fax: (907) 465-2293

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Alaska Alcohol Tax Burden Nation's Lowest
Excise Tax is Only One of Several Taxes Imposed by Other States

Released: April 3, 2002
Contact: Representative Lisa Murkowski at (907) 465-3783

(JUNEAU) - What first looked like a 100-proof objection to raising Alaska's alcohol tax is now looking more like watered-down beer, as research reveals that Alaska's cumulative taxation of alcohol is actually the lowest in the nation, Rep. Lisa Murkowski (R-Anchorage) said today.

Murkowski has sponsored House Bill 225, which would raise Alaska's alcohol excise tax from about 3 to 4 cents tax per drink of beer, wine or distilled spirits by a dime a drink, the first increase since 1983. The bill is an effort to increase alcohol excise tax revenue from $12.1 million per year to approximately $34 million per year to help offset the estimated $250 million to $483 million annual state costs for alcohol abuse.

"In focusing on just excise taxes, however, we had been overlooking the fact that that is the only state tax Alaskans pay on alcohol," Murkowski said. "Most other states have not only an excise tax, but also general sales taxes, special alcohol sales taxes, and even special taxes for on-premise consumption of alcohol - not to mention special alcohol sales taxes and other levies in many major tourist cities."

Even if Alaska should impose both the 10-cents per drink excise tax increase in House Bill 225 and the 3 percent statewide sales tax being debated in House Bill 303, she said, Alaska's effective tax on alcohol would still be well below the national average.

The national average cumulative tax on alcohol amounts to approximately 30 cents per 12-ounce beer, 32 cents per 5 ounce glass of wine, and 35 cents per 1 ounce of liquor, she said. Many states have much higher rates:

  • The highest tax per beer, 93 cents, is levied in Tennessee (13 cents per gallon excise tax, 6 percent state sales tax, and a 17 percent wholesale beer tax);
  • The highest tax per glass of wine, 89 cents, is levied in Oklahoma (72 cents per gallon excise tax, 4.5 percent state sales tax, and on-premise tax of $1 per bottle and 12 percent of the sales price);
  • The highest tax per mixed drink, 87 cents per drink, is levied in Tennessee, ($4 per gallon excise tax, 6 percent sales tax, 15 cents per case and a 15 percent on-premise tax)

"Those who claim House Bill 225 would raise Alaska's alcohol excise tax by 300 percent are technically correct - mathematics proves that adding a dime to a three-cents-per drink tax is 300 percent," Murkowski said. "But mathematics also proves that we would still have the lowest cumulative alcohol taxes in the country, even with dime a drink increase. That's the kind of proof that Alaskans should be paying more attention to."

Murkowski pointed out that even at an increased rate, the state's alcohol excise tax would come nowhere near compensating the state for the social, economic and personal costs that alcohol abuse imposes on Alaska for police, courts, jails, hospitals, medical care, domestic violence and deaths resulting from alcohol abuse.

"Clearly, it would be very difficult to pass an alcohol tax to fully compensate Alaskans for the approximately $250 million that alcohol abuse costs us each year," Murkowski said. "Instead, I view this more as a user fee: Those who drink should help bear the costs of their choices."

Murkowski said her bill is an important part of the Republican Majority's efforts to address the problem of alcohol and alcohol abuse in Alaska, and would help provide revenue needed for the expanded treatment, therapeutic courts, diversion programs and other initiatives the Twenty-second Alaska Legislature has passed or is still considering.

HB 225 remains in the House Finance Committee, where it has rested dormant since being tabled Feb. 6.

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For more than a year, you have heard all sorts of things regarding Alaska’s alcohol excise tax, but did you know ...

  • Alaska currently has the lowest tax-per-drink rates in the nation when you consider that most other states assess not only an excise tax, but also sales taxes, alcohol sales taxes, and in many cases, premise taxes.
  • Alaska's existing alcohol excise tax of $0.03 to $0.04 per drink is the only state tax on alcohol.
  • Alaska is one of only five states with no state sales tax; the others are Delaware, Montana, New Hampshire, and Oregon.
  • If Alaska increased its excise tax by a dime a drink and also imposed a 3 percent state sales tax, the total tax-per-drink would only be $0.25 - $0.26.
  • The average tax-per-drink for beer, wine, and liquor among the states is $0.30, $0.32 and $0.35, respectively.
  • The nation's highest tax-per-drink for beer is in Tennessee, with a $0.13 per gallon excise tax, 6 percent state sales tax and a 17 percent wholesale tax on beer, totaling $0.93 tax per drink.
  • The nation's highest tax-per-drink for wine is in Oklahoma, with a $0.72 per gallon excise tax, 4.5 percent state sales tax, a $1 per bottle and a 12 percent on-premise tax, totaling $0.89 tax per drink.
  • The nation's highest tax-per-drink for liquor is in Tennessee, with a $4 per gallon excise tax, 6 percent state sales tax, an additional $0.15/case and a 15 percent on premise tax, totaling $0.87 tax per drink.
  • Alcohol in Delaware, Montana, New Hampshire and Oregon is sold only through the state, and revenue from alcohol is generated from various taxes, fees, and net profits.
  • North Dakota has a 5 percent state sales tax, but charges an additional 2 percent on alcohol, making an effective tax rate on alcohol of 7 percent.
  • Texas charges an extra $0.05 per drink tax on airline sales.

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Related Links

· Senate Passes Alcohol Excise Tax Increase

· House Passes Long-Range Fiscal Plan

· Alaska Alcohol Tax Burden Nation's Lowest

· Murkowski Introduces Alcohol Tax in House, 04-02-01

· Anti-Alcoholism Drug Holds Promise

· Alaska Advisory Board on Alcoholism and Drug Abuse study
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· Circle of Care Project

· Drug Abuse & Alcoholism Programs Statewide

· HB 80 : Legal Hours for Sale of Alcohol

· HB 92 : Alcohol Sales Near Schools or Churches

· HB 132 : Liquor License Applicant Check/Training

· HB 152 : Brewpub Licenses

· HB 153 : Restaurant Liquor Licenses

· HB 172 : Therapeutic Drug and Alcohol Courts

· HB 201 : Alcohol Server May Not Consume

· HB 214 : Civil Action Against Minors in Bars

· HB 225 : Alcoholic Beverage Tax

· HB 281 : Civil Liability for Providing Alcohol

· HB 330 : Providing Alcohol To Persons Under 21

· SB 215 : Common Carrier Liquor License

· SCR 2 : Appropriations: Sobriety Awareness Month

· SCR 22 : Appropriations: Sobriety Awareness Month