Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

Staff to reexamine pot tax

 

August 17, 2017



A proposed tobacco and marijuana excise tax ordinance will be divided and head back to the Haines Borough Assembly as two separate ordinances.

The assembly voted unanimously Aug. 8 to separate the two taxes that charges an excise tax of $2 per pack of cigarettes, 45 percent of the wholesale price of other tobacco products, and $5 per ounce of marijuana.

Assembly member Heather Lende said a tobacco tax is meant to curb smoking and that including marijuana in a single ordinance unfairly associates the two products.

“It seems like we’re bunching them together and that the tax on marijuana is punitive because essentially the tax on tobacco is,” Lende said. “I’m for the marijuana tax but I don’t feel it’s punitive. I feel it’s something we need to do to prepare for the oversight of the industry.”

Excise taxes are charged before a product reaches a retailer as opposed to a sales tax which is charged at the point of retail sale.

Assembly member Stephanie Scott wanted to get rid of the tobacco tax altogether.

Scott cited feedback Donnie Turner gave at a previous assembly meeting during public comment regarding the regressive nature of a tobacco tax disproportionately affecting lower income smokers.

“(Cigarettes) are in between $9 and $10 a pack and it would be a burden on people who had financial problems,” Scott said. “I think we shouldn’t put a tax on tobacco products.”

Assembly member Ron Jackson disagreed.

“A 12-, 13-, or 14-year-old person that’s looking at that cost increase might not choose to smoke and might not smoke the rest of their life and that has a much more powerful impact to me,” Jackson said.

Assembly members Lende and Tom Morphet also said they supported a tobacco tax.

Sherri Maust spoke during public comment and said a tobacco tax seems contradictory.

“Yes it would be a healthier option for people not to smoke, but we’re hoping that people buy cigarettes because we want to make money off of them buying cigarettes,” Maust said.

Petersburg, Sitka, Ketchikan and Juneau are among Southeast communities that have tobacco excise taxes.

Petersburg taxes tobacco at a similar rate proposed in the local ordinance. Petersburg coffers earned $248,000 last fiscal year from tobacco tax revenue.

In fiscal year 2014, the Sitka borough received $489,000 in tobacco tax revenue.

For fiscal year 2015, after the borough announced plans to increase the tax, tobacco sellers stockpiled product before the taxes went into effect, said borough senior accountant Larry Fitzsimmons. Sales due to hoarding jacked tobacco tax revenue to $735,000.

With the new rates, Sitka is budgeting $885,000 in anticipated tobacco tax revenue for the next fiscal year.

Ketchikan directs 15 percent of its tobacco tax revenues into cessation programs and the remainder goes to schools.

According to countyhealthrankings.org, 17 percent of the Haines population smokes compared to 19 percent in Sitka and 18 percent in Ketchikan.

The assembly will again discuss the taxes at its Aug. 22 regular meeting.

 
 

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