Should Petersburg tax tobacco products and e-cigarettes? That question goes before local voters in the Oct. 7 municipal election.
Petersburg resident Mike Mika knows he’s got a bad habit.
“Smoking, I believe, is not good for you, of course. And I should stop or quit or slow down or whatever,” he says.
Standing on a downtown sidewalk, the 30-year smoker says Petersburg’s proposed tobacco tax might help him, and others, do that.
Petersburg’s proposed $2-a-pack cigarette tax would be one of the highest in Alaska. But Anchorage taxes other tobacco products at a higher rate. (Raul Lieberwirth, Creative Commons)
But he doesn’t support the ballot measure creating that tax because he doesn’t know how the revenue would be spent.
“I think if they were a little bit more specific on where that tax money was going to go to, I think some people wouldn’t have a problem with paying that extra $2,” he says.
A proposition on the municipal ballot would add a $2 tax to each pack of cigarettes sold within the Petersburg Borough. Current prices average $10 a pack.
Cigars, chewing and pipe tobacco, and similar products would be charged a 45 percent tax on the wholesale price.
Borough Clerk Kathy O’Rear says the tax would also cover a more contemporary product.
“It also addresses e-cigarettes, the vapor type. There would be a charge on those also,” she says.
The tax was proposed by a municipal committee looking at different ways to raise revenue. Its work was reviewed by the Petersburg Assembly, which decided which proposals would go onto the ballot.
Sue Flint, a business-owner who chaired that committee, says it heard support from the Petersburg Indian Association and the local hospital.
“We thought that may be a deterrent, maybe, to young people starting to smoke if they cost more. So we suggested $1 a pack and the Assembly raised it to $2 a pack,” she says.
Six other measures are on the ballot. Four propose changing the borough’s senior citizen sales-tax exemption. Another would drop state campaign-finance reporting rules. Yet another would raise the cap for taxable purchases.
Flint says there was talk about how tobacco tax revenue would be spent. But nothing is on paper.
“If they want to put it toward not-smoking programs or something health-related at the hospital, or whatever, that’s up to them every year,” she says. “We cannot dedicate a tax like that.”
Petersburg business manager Lee Corrao also served on sales tax committee. He says the tax won’t work.
“I don’t think it’s going to generate the kind of revenue the assembly might think,” he says.
He doesn’t like smoking. But he says residents would just buy their tobacco someplace else.
“There will be a net decrease in the sale of tobacco, significant, I believe. So any gain from increased tax will be lost by volume (of) sale,” he says.
If the tax passes, the municipality will have the paperwork ready.
Finance Director Jody Tow says few outlets would have to fill out any new forms.
“There’s one main distributor who sells the tobacco products to the businesses in town. And we can have that distributor fill out and do all the paperwork,” she says.
If the measure passes, Petersburg would join Bethel in having the highest cigarette taxes in Alaska.
State figures show Juneau, Sitka and Barrow charge half of Petersburg’s $2 fee.
Anchorage’s wholesale tax is higher, at 55 percent, while Sitka and Juneau’s are the same as Petersburg’s, at 45 percent. Barrow, Fairbanks and the Matanuska-Susitna Borough have far smaller wholesale taxes, at between 6 and 12 percent.
