Juneau Assembly approves big hike in local tobacco taxes; e-cigarettes also covered

E-cigarettes now included in Juneau's tobacco system
Robert Rodman, co-owner of Percy's Liquor Store, rings up a customers merchandise including a pack of cigarettes on July 14, 2009. The Assembly is considering higher taxes on tobacco products.

Following public comment by community members young and old at City Hall Monday night, the City and Borough of Juneau Assembly approved a $2 per pack increase to the city tobacco excise tax. The proposed increase would bring the excise tax on each pack of cigarettes to $3, on top of the standing five percent city sales tax and $2 state tax. Assembly members also presented a proposal on potential uses for the $1.7 million increase in tax revenue resulting from the increase.

 

Resident Joe Lassiter presented detailed statistics from an Alaska behavioral risk study that showed about 42 percent of smokers live in households below the poverty level, and about 45 percent of smokers have not graduated from high school.

“You are taxing mainly the poor and the uneducated here,” he said.

In order to qualify as an excise tax as opposed to a sales tax, which would be put to a public vote, the intended purpose of the tax increase must be some reason other than revenue. Assembly members stated in the approved ordinance that “the primary objective of the ordinance is to reduce consumption of cigarettes and tobacco products, particularly among youth.”

The proposal also adds e-cigarettes to the classification of “tobacco products,” which are currently taxed at 45 percent of retail value.

Seventeen-year-old Jordyn Vinje told the crowded room of adults that before she finished high school, students in her classes would take puffs from e-cigarettes in classrooms when their teachers turned their backs to switch on a projector.

She said she would like to discourage her peers from smoking e-cigarettes, and that a rise in prices could help her mission.

Hilary Zander of the National Council on Alcoholism and Drug Dependence told the assembly that use of e-cigarettes among youth has increased “threefold” in 2014, which makes kids twice as likely to start smoking regular tobacco. She said regular tobacco use among youth has decreased, but she would ideally like to see a zero percent starting rate among teenagers.

Visiting from Anchorage, the Alaska state director of the American Cancer Society, Emily Nenon, agreed that e-cigarette use has increased among youths.

“We are particularly concerned with skyrocketing use of e-cigarettes among kids,” she said.

Nenon told assembly members that according to her statistics, each pack of cigarettes actually costs the state about $19 per pack if the treatment of tobacco-related illness and lost productivity is considered. She said this is much higher than the suggested excise tax, which would put the total cost of a pack around $11.

Local tobacco-cessation advocate Michael Patterson, also known as the “Ghostwalker,” also spoke in favor of the tax. Assemblywoman Kate Troll asked Patterson if taxing e-cigarettes as smoking cessation devices would cause negative impacts by increasing other tobacco usage.

Patterson said e-cigarettes are not cessation devices because they cause nicotine tolerance to increase and can then lead to an increased use of tobacco if smokers fail to quit.

Assembly members Jerry Nankervis, Debbie White and Mayor Merrill Sanford opposed the tobacco tax increase. Nankervis said youths should be encouraged to quit smoking by their parents, not taxation, which affects everyone.

“I get weary of the vilification of people engaging in an activity that is legal,” Nankervis said. “A 200 percent increase on a pack of smokes is ridiculous.”

Despite their objections, the motion passed with six approvals.

The tobacco tax draft suggests the $1.7 million increase in expected revenue would replace general funding to community services such as Juneau Alliance for Mental Health, Zach Gordon Youth Center, Juneau Youth Services and the Teen Health Center.

As much as $340,000 in new funding may go to Rainforest Recovery Center, and $600,000 in tobacco tax proceeds could go to the Housing First Project. The CBJ’s Committee of the Whole has initially promised $1.5 million to that latter project.

Depending on how much revenue is raised from the new tax, the Juneau School District may also benefit. Last year, the city dropped $200,000 in activities funds as a cost-cutting measure. Another $512,000 in tobacco tax revenue could be used to increase school funding to the maximum allowed by the state. The school district has said the possibility of no increase in city contributions is a major concern as it attempts to balance its budget for Fiscal Year 2016.

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