Local cost of smoking may float higher

Two women take their smoke outside the Lucky Lady Pub on South Franklin Street on Wednesday. The Assembly is looking into raising taxes on tobacco products.

City leaders will soon vote on whether to increase the tobacco excise tax by an extra $2 per pack of cigarettes.

 

The proposed increase to the City and Borough of Juneau’s tobacco excise tax was forwarded Wednesday to the full Assembly for approval. The increase was put forward by the CBJ Finance Committee, with Mayor Merrill Sanford being the only one against the increase.

The sales tax on tobacco and tobacco-related products was approved by voters in 1990 and has seen two subsequent increases, in 2003 and 2009. The current tax stands at $1 per pack of cigarettes and 45 percent on tobacco-related products.

Tobacco-related products include any item containing nicotine, such as snuff and chewing tobacco. E-cigarettes will be included in the new city code, but only if they contain nicotine.

“The burden of proof for nicotine content will fall on manufacturers,” said Dr. Kristen Cox of the National Council on Drug Dependence. Cox gave a presentation in October to the CBJ Assembly of the Whole concerning the social and monetary benefits of increasing taxes on tobacco products.

The Finance Committee chose to follow the recommendation of the health administration to leave the sales tax of tobacco-related products at 45 percent, but add e-cigarettes to this category. That means the proposed increase will only apply to packs of cigarettes, which will now have a $3 excise tax.

Finance Director Bob Bartholomew clarified that this will be in addition to the $2 state tax and the 5 percent city sales tax already in place.

Historically, increases in tobacco taxation have been put to a public vote. Bartholomew said this is only required with sales tax increases, not excise taxes.

A sales tax is classified as seeking only higher revenue, while an excise tax also seeks some other result aside from monetary.

“To change the behavior of smoking would be classified as excise,” Bartholomew said.

The decision to classify this tax as excise or sales will be left to the Assembly.

In 2013, the revenue from tobacco taxes was approximately $1.5 million, according to the CBJ Finance Department. Cox calculated increased revenue with the proposed increase would be $4.4 million, with a total of $3.9 million after accounting for decreased tobacco consumption.

“(Statistics) definitely show the higher the tax, the less incidence of smoking, particularly youth,” Assemblywoman Member Kate Troll said.

She asked Cox if there was a social service recommendation.

Cox told the committee that increasing taxes would curb smoking among adults and youth, citing her findings from a youth risk behavior survey. Cox said she found that the smoking rate in the Juneau School District decreased by 8 percent since the last tax hike in 2009. Juneau’s annual tobacco revenue has decreased by 4 percent during the same time.

Deputy Mayor Mary Becker inquired about other Alaskan communities that have raised tobacco sales taxes recently. Cox responded that Petersburg and Bethel have both recently increased their tobacco sales tax by $2.

Currently, Anchorage has the highest tobacco sales tax at $2.39 per pack and 55 percent for other tobacco products. Chicago, Illinois has the highest tobacco sales tax rate in the country at $6.16 per pack.

Since the first increase in 2003, CBJ tobacco tax revenue has been specified for service and wellness programs related to substance abuse and tobacco cessation efforts.

While the recommendation to use proceeds from smokers to help other smokers quit is emphasized, revenue may be placed in the general fund and used at the Assembly’s discretion.

•Stephanie Shor can be contacted at Stephanie.shor@juneauempire.com or at (907) 523-2279.

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