TOBACCO TAXESLocal Taxes in Alaska

Looking at the Bigger PictureA Public Health Perspective

Tobacco Taxes are an “Access” issue What are some other access issues that

you can think of? How can you use these other issues to

your benefit when engaging stakeholders on tobacco control policy issues?

Recommended reading: Prescription for a Healthy Nation by Thomas Farley and Deborah Cohen

Why Establish a Tobacco Tax?

Reduces the total amount of tobacco consumed Reduces the prevalence of tobacco use Increases the number of tobacco users who quit Reduces initiation of tobacco use among youth Reduce health care costs Saves Lives

http://www.thecommunityguide.org/tobacco/increasingunitprice.html

Added Bonus: Potential revenue for your community

“It's not a hard concept to grasp -- as taxes on cigarettes go up, sales of cigarettes go down.”

-Convenience Store News, 2009

Price Vs. Consumption

Tobacco Taxes are a Best Practice U.S. Surgeon General Institute of Medicine Centers for Disease Control and Prevention U.S. Community Preventive Services Task

Force National Association of County and City

Health Officials World Health Organization Economic and public health research

And what do tobacco companies say about taxes?

In their own words…

“It is clear that price has a pronounced effect on the smoking prevalence of teenagers, and that the goals of reducing teenage smoking and balancing the budget would both be served by increasing the tax on cigarettes.”

-Philip Morris, 1981

“Of all concerns, there is one - taxation - that alarms us the most. While marketing restrictions and public and passive smoking restrictions do depress volume, in our experience taxation depresses it much more severely.”

-Philip Morris, 1985

“Together with manufacturers’ price increases in recent years and substantial increases in state and federal taxes on tobacco products, these developments have had and will likely continue to have an adverse effect on the sale of tobacco products.”

-Reynolds American Inc., 2011

Industry Resources Devoted to Fighting Taxes

California Proposition 29 – Spring 2012, would have increased state cig tax by $1

Would have raised $850 million for cancer research fund and anti-tobacco efforts

Polling in March 2012: 68% favor, 29% oppose

Industry Resources Devoted to Fighting Tobacco Taxes

Heart/Lung/Cancer spent $3.5 million for campaign (1/2 from Lance Armstrong Foundation)

Californians Opposed to Out of Control Taxes & Spending spent$40 million war chest (approximately ½ from Philip Morris & RJR)

June 2012 vote:49.8% in favor - 50.2% opposed

What does the research say?

How much tax?

A 20% Increase on Unit Price

Reduce overall consumption of tobacco products by 10.4%

3.6% drop in adult smoking prevalence 8.6% drop in youth initiation Evidence also suggests that tobacco taxes

are an effective intervention in reducing tobacco-related disparities among income groups and may reduce disparities by race and ethnicity.

http://www.thecommunityguide.org/tobacco/increasingunitprice.html

What kind of tax?

Unit based tax Ad valorem tax (percentage) Weight based

Local Tobacco Taxes in Alaska

AK State & Local Cig. Taxes as of December 31, 2012

Public Health Region Community Tax Total Tax per Pack

Anchorage/Matsu Anchorage $2.21 + AK ($2.00) $4.21

Anchorage/Matsu Matanuska-Susitna Borough

$1.00 + AK ($2.00) $3.00

Interior Fairbanks $0.20 + AK ($2.00) $2.20

Northern Barrow $1.00 + AK ($2.00) $3.00

Southeast Sitka $1.00 + AK ($2.00) $3.00

Southeast Juneau $1.00 + AK ($2.00) $3.00

Southwest Bethel $2.00 + AK ($2.00) $4.00

Let’s Do the Math

Current price for a pack of cigarettes is $10 (approximate)

Increase unit price by 20% = local tax goes from $1 to $3

In a city of 25,000 adults a 3.6% drop in adult use = 207 fewer smokers (this doesn’t account for positive impact on youth)

And additional $$$ for the city

Potential for Local Revenue

The Campaign for Tobacco Free Kids estimated that a $1 tax on cigarettes in Bethel would raise $297,000, result in 23,000 fewer packs of cigarettes smoked and reduce youth smoking by 11.4%.

Their estimate was spot on

Bethel Tobacco Tax Increase

Dec 2012 – City Council passed $2.21 tax increase & 45% increase on wholesale price of OTP

March 2013 – tax increase took effect & generated and in two months, generated extra $70,681.52 for city coffers

City anticipates $300,000 increase to FY 2013 budget (just as CTFK had predicted)

Bethel Tobacco Tax Increase

“ I never expected that much $, I was hoping it would help people to not smoke or use tobacco as much and I wouldn’t want to count on these dollars in future years because I’m hoping it’s discretionary smoking and it would go away. But I would like to use those $$ for something healthy, something to encourage people, things that might make you not want to smoke.” - Mayor Joe Klejka

Bethel Tobacco Tax Increase

Decision that $$$ would go to parks and recreation for one time projects including a walking path and the YK Regional Aquatic Center

In May 2013 – cig tax generated $45,668 In June 2013 – cig tax generated $31,000Overall consumption of tobacco products in

the community of Bethel has definitely decreased

Who Can Pass a Tax?

City or Tribal Council - Vote of the council

The People - Ballot initiative

Resources

For more information about local tobacco taxes in Alaska call