n a novel attempt to curb the flow of narcotics--and make some money on the side--state lawmakers are considering a tax on illicit drugs.

State Sen. Jeff Hill (R-Tucson) insists that his bill, approved by the Senate this week, is not the first step toward legalizing drug use in Arizona.

Hill's bill, which still must be passed by the House, would impose a luxury tax on confiscated illegal drugs: $10 an ounce on marijuana and $125 an ounce on cocaine, heroin and other hard drugs.

Hill says that arrested drug dealers and users probably could not pay the tax. This would allow the state to confiscate any visible assets.

"You go after his house, his car, etc.," Hill said.

To avoid paying the tax, individuals who dabble in drugs could purchase a luxury tax license voluntarily from the Arizona Department of Revenue.

Those individuals essentially would be reporting their illegal activities to the government. In this respect, Hill's bill resembles U.S and Arizona laws requiring that illegal income be reported on income tax returns.

The drug license idea is also reminiscent of the old $50-a-year federal gambling stamp, which was passed in the 1950s to try to stem organized crime activity by identifying gamblers and which was ruled unconstitutional in 1968.

Hill said he doubts that many people would obtain a drug license. Those who do, however, would retain their anonymity. The revenue department would be prohibited from giving the information to law enforcement authorities.

This confidentiality provision is seen as a way to avoid a constitutional challenge on the grounds that taking out a license would, in effect, require a person to testify against himself.

Had the proposed law been in effect in 1982, it would have generated nearly $10 million for the state, Hill said