Tobacco taxes in the City and Borough of Juneau will triple after a 6-3 vote by the Juneau Assembly to assess a $3 tax on each pack of cigarettes.
The new tax rate — which takes effect April 1 — replaces Anchorage’s $2.39 as the state’s highest tobacco tax. The Assembly also implemented a new tax on e-cigarettes.
Combined with state and federal excise taxes, the average price for one pack of cigarettes will increase to $10.50 in Juneau.
Mayor Merrill Sanford joined Assembly members Jerry Nankervis and Debbie White in voting against the ordinance. Nankervis found fault with how the estimated $1.7 million increase in tax revenue might be spent by the Assembly.
“I could support a tax increase on tobacco if it went entirely back to the costs of tobacco,” Nankervis says.
The city’s tobacco tax revenue currently goes to Bartlett Regional Hospital and various social service grants. The ordinance does not dictate how tobacco tax revenue is spent.
The Assembly heard testimony from eight people whose opinions ranged on both sides of the issue. Paul Thomas, owner of Alaska Cache Liquor, criticized the Assembly’s proposals to spend tobacco tax revenue on services used by non-smoking residents.
“Taxing a small segment of the population to increase the general fund for all in the city is wrong,” Thomas says. “Let’s face it, this is about generating tax revenue. Big Brother doesn’t like tobacco, so it’s illegal.”
Testifiers repeatedly mentioned keeping the city’s youth from smoking as a major benefit in passing the ordinance.
“Increasing that price does particularly affect youth use. That’s where we see the strongest impact,” says Emily Nenon, the state government relations director for the American Cancer Society
Nenon testified that the $2 increase hardly covers the estimated $19 one pack of cigarettes costs the State of Alaska. That number comes from a 2012 study measuring tobacco-related health costs and job productivity.
“That’s not smoke breaks. That’s lost productivity due to premature death,” Nenon says.
The Assembly also voted to include e-cigarettes under the definition of “other tobacco products,” taxing them at 45 percent of the wholesale price.
Matthew Farrelly is an expert in tobacco control studies at Research Triangle International in North Carolina. He says due to a lack of regulation and information on e-cigarettes from the Food and Drug Administration, communities across the nation are taking action to regulate them on their own.
“When there’s uncertainty it’s not surprising that they’re going to say ‘we’re going to discourage this until we have clear information that it’s safe’,” Farrelly says.
Farrelly added that excise taxes on tobacco have the most immediate effect at reducing sales. But he says states that invest in tobacco prevention programs see long-term decreases.
The Assembly has proposed using the increased revenue from the new tax rate to restore funding for the Social Services Advisory Board, which sponsors a tobacco prevention program for the Juneau School District. City budget cuts have threatened the board’s funding in recent years
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