Wednesday, November 10, 2010

Anchorage Assembly Votes 8-3 To Hike Cigarette Taxes By 75 Cents Per Pack; Total Local Taxes To Reach $2.21 Per Pack By January 2011

On November 9th, 2010, the Anchorage Municipal Assembly voted 8-3 to slap an additional 75 cents per pack tax on cigarettes sold within the Municipality of Anchorage. When the new tax takes effect on January 1st, 2011, Anchorage's total cigarette tax will be $2.21 per pack. Since it's an excise tax, voter approval is not required. The measure is set forth in AO 2010-70.

AO 2010-70 also calls for a more modest increase in the excise tax on other tobacco products, from 45 percent of the wholesale price per unit to 55 percent.

The resultant cost breakdown on a typical pack of cigarettes:

-- Base cost of pack: $4.00
-- Federal tax: $1.00
-- Alaska state tax: $2.00
-- Anchorage municipal tax: $2.21

Total cost: $9.21 per pack. At present, a pack or Marlboro Menthols ranges from $7.95 at Fred Meyer Midtown to $8.72 at Wal-Mart Dimond, although there are promotional discounts from time to time. A few brands already cost $10 per pack or more. KIMO Channel 13 news video embedded below:

Surprisingly, it was three of the more liberal members of the Assembly who voted against it; Harriet Drummond, Elvi Gray-Jackson, and Patrick Flynn. Flynn thought the increase was too big, while Gray-Jackson questions whether it's role of government to tax people out of a bad habit. Assembly Chair Dick Traini, the primary architect, proposed the tax hike to allow the city to rely less on property taxes as it tries to deal with a budget shortfall. He anticipates revenues from $5.2 million to $6.2 million. Traini provided a further explanation in the accompanying AM 2010-70. However, in the next breath, Traini acknowledged that it would cause some people to quit. This, of course, would transform it into a self-sunsetting tax increase. Passing a potentially self-sunsetting tax increase is not exactly the smartest move Traini ever made. Traini can't even make up his mind whether to use the revenue to offset property taxes or restore some services.

It should also be disclosed that Dick Traini is an active member of the Church of Jesus Christ of Latter-day Saints, which discourages tobacco use in its Word of Wisdom health code. Traini has no track record of publicly promoting his religion under Assembly auspices, however.

Patti Ginsburg, board member of the prohibitionist American Lung Association, told the Assembly the evidence is clear that "increasing cigarette taxes is one of the most effective ways to reduce smoking." Well d-uh, no kidding. Of course it will reduce smoking -- which will also reduce the anticipated revenue from the tax. Cliff Kramer, who opposed the tax increase, recognized this problem, and called for more long-term solutions to our revenue problem.

Such as a municipal sales tax. Our revenue streaming is dangerously skewed toward property taxation, excise taxes, and fees. A general sales tax, assessed against all goods except food, would diversify and stabilize our revenue stream. The problem is in selling the Anchorage voters on it. In the April 2006 municipal election, Proposition 13 called for a three percent municipal sales tax. It was authoritatively defeated with a 70 percent No vote. Yet more taxophobic environments such as Wasilla and Palmer have passed local sales taxes to diversify their revenue streams. If they can do it, so can we.

Now we wait to see whether Mayor Dan Sullivan will allow it or veto it. My guess is he will reluctantly allow it, because he faces the prospect of laying off a couple of dozen cops and firefighters, and even parking a couple of fire trucks to balance the budget, although he still insists upon giving 162 city executives a five percent pay raise.

1 comment:

  1. I PROPOSE A LUXURY SALE TAX OF 75% ON THE vampire jew.