Tobacco tax one year later
Revenues are more than budgeted so far
January 10, 2019
The borough’s tobacco tax has been in effect for one year, and revenue is exceeding projections.
The tax is remitted quarterly so revenue from October, November and December hasn’t been collected yet, but in the first three quarters the borough has received $67,845.
“On an annual basis we might expect it to bring in roughly $100,000 if sales remain at the same level,” borough finance director Jila Stuart said. “For (this fiscal year) the borough budgeted $80,000 in revenue so the revenues will likely exceed the expectations from last March when the budget was developed.”
The borough collected about $14,000 in excise taxes in the first quarter, slightly less than projected. At the time, Stuart guessed that retailers stocked extra tobacco products before the tax went into effect, which would explain the unusually low first-quarter numbers. In both Sitka and Petersburg, the municipalities received more revenues the second year the tax was in effect, compared to the first year.
The excise tax is $2 per pack of cigarettes and 45 percent of the wholesale price of other tobacco products.
The assembly passed the tax 4-2 in October 2017 with some members citing hope that the tax might curb smoking. Others said tax revenues would help decrease the budget deficit.
Haines Quick Shop manager Eric Ferrin said tobacco sales have remained steady despite the tax.
According to a 2010 study cited on the Center for Disease Control’s website, a 10 percent increase in the cost of tobacco decreases smoking by 3 to 5 percent and that “youth and young adults are two to three times more likely to respond to increases in price than adults.”