A proposed excise tax on tobacco raised some concerns from members of the Kenai Peninsula Borough at their Tuesday night meeting.
The suggested ordinance (2024-14) would enact a borough-wide excise tax on tobacco products, which, in turn, would help reduce the number of individuals smoking in the area.
Several boroughs and municipalities in the State of Alaska impose excise taxes on cigarettes and other tobacco products, including the Municipality of Anchorage, the Ketchikan Gateway Borough, and the City and Borough of Juneau.
According to a memo from President Brent Johnson and Assembly members Cindy Eckland and Mike Tupper, the Center for Disease Control Office of Smoking and Health has estimated a 10% increase in price to reduce overall cigarette consumption by 3-5%. According to the Campaign for Tobacco-Free Kids, annual healthcare costs in Alaska directly caused by smoking is $509 million, and the smoking-caused productivity losses in Alaska are $621.3 million.
Research on cigarette consumption suggests that both youth and young adults are two to three times more likely to respond to increases in prices than adults.
The potential revenue from this tax would be divided to help different areas of the community.
30% of the net revenue from this tax will be used to start and fund childcare facility grants for economic development purposes, 34% will go toward the School Revenue Capital Project Fund, 15% is to be used for the General Government Capital Project Fund, and 1% of the revenue from this tax may be transferred to Alaska Department of Health’s Alaska’s Tobacco Quit Line to use for tobacco cessation services, campaigns, and materials.
The remaining 20% of the revenue would stay in the general fund, which may ultimately allow for a decrease in the general government’s real property tax mill rate.
Although many members understood the reasoning behind the decision, there was some discrepancy in the proposed ordinance.
President and sponsor Johnson says that currently, tobacco companies are spending about $8 billion dollars a year on advertising in order to get people to use their products. The problem isn’t trying to get the older generation to stop smoking but rather ensuring that the younger generation doesn’t want to start.
“It’s the children that are susceptible to beginning to use tobacco products. According to a study I’ve read, the average age for your child to start smoking is 15 years old. So, while the companies are spending a lot of money trying to get kids to smoke, even though they can’t do it directly, that’s where their emphasis is. I was to do something to make them not start smoking. This isn’t about stopping the use of tobacco. This is about a group of people that are young that I don’t want to start,” said Johnson.
Assembly member Tyson Cox agrees with President Johnson about the importance of the fight against tobacco, but the definition of what is considered tobacco needs to be more direct. Therefore, he believes this ordinance, while a good idea, needs some more work.
“The other thing that really bothers me, and this is probably the biggest one, is when you have a sin tax, generally the point is to either have people not start or to quit. And so the question you have to ask yourself is, what is that number? How much is that supposed to be? I don’t know if we’ve studied that at all…The other thing that I question quite a lot is that the kids at school, most of them aren’t smoking; they’re vaping, and they’re getting vapes online. They’re getting them from other places; they’re not necessarily getting them locally. So that becomes a problem for me as well,” said Cox.”
The final vote was five members against and only three in favor.
This failure of the ordinance affected the outcome of the following ordinance.
Ordinance 2024-15 was intended to establish a childcare grant funding program for economic development purposes. The funds were to come from the funds from the excised tobacco tax. However, considering that this ordinance was contingent on the passed tobacco tax ordinance, it was withdrawn by its sponsor Cindy Eckland.