Tobacco tax revenues low in first quarter
May 24, 2018
The borough collected $14,422 in tobacco excise taxes in the first three months of its enactment—slightly less than projections if the trend continues.
Borough finance director Jila Stuart projected annual revenues to be about $80,000 based on an analysis of similarly sized communities. If the current trend continues, the borough would receive about $56,000 annually.
Stuart said she suspects retailers stocked extra tobacco products before the excise tax went into effect and that the first quarter revenues might be unusually low. The excise tax is $2 per pack of cigarettes and 45 percent of the wholesale price of other tobacco products.
“I’m guessing the figures will increase in the summer,” Stuart said. “It will be interesting to see.”
Petersburg finance director Jody Tow said the first three months of their municipality’s tobacco tax revenues were low compared to the same period the following year. In 2015 during the first three months when the tax first went into effect, retailers paid $41,100. The following year during the same period they paid $50,400.
Tobacco sellers in Sitka hoarded tobacco products when their local government increased its tobacco tax. In 2014, the City and Borough of Sitka received $489,000 in tobacco tax revenue.
The following year, after the borough announced plans to increase the tax, tobacco sellers stockpiled product before the tax hike went into effect, said Sitka Borough senior accountant Larry Fitzsimmons. The hoarding jacked tobacco tax revenue to $735,000 that year.