Tobacco Taxes LOCAL TAXES IN ALASKA

Looking at the Bigger Picture A Public Health Perspective  Tobacco Taxes are an “Access” policy  What are some other access issues 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 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

Southeast Alaska Youth Smoking Rates: We Can Do Better

Southeast Alaska Youth Smokeless Tobacco Use Rates: We Can Do Better

Northern Alaska Youth Smoking Rates: We Can Do Better

Northern Alaska Youth Smokeless Tobacco Use: We Can Do Better

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

In their own words… WHAT DO TOBACCO COMPANIES SAY ABOUT TAXES?

“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 Tobacco Taxes  Spring 2012, California Proposition 99 (voter initiative) 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 raised $3.5 million for campaign  1/2 from Lance Armstrong Foundation  Californians Opposed to Out of Control Taxes & Spending $40 million war chest  Approximately ½ from Philip Morris & RJR  June 2012 vote: 49.8% in favor % opposed

Tobacco Industry Opposition Tobacco companies are so opposed to tobacco taxes, (especially in areas with large populations) that they are willing to spend tremendous amounts of many to oppose them; They are also willing to lie to the public in order to defeat tobacco taxes.

How much tax? WHAT DOES THE RESEARCH SAY?

A 20% Increase on Unit (Retail) 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.

What kind of tax?  Unit based tax  Ad valorem tax (percentage)  Weight based

Local Tobacco Taxes in Alaska

AK State & Local Cigarette Taxes as of December 31, 2012 Public Health Region CommunityTaxTotal Tax per Pack Anchorage/MatsuAnchorage$ AK ($2.00) $4.21 Anchorage/MatsuMatanuska- Susitna Borough $ AK ($2.00) $3.00 InteriorFairbanks$ AK ($2.00) $2.20 NorthernBarrow$ AK ($2.00) $3.00 SoutheastSitka$ AK ($2.00) $3.00 SoutheastJuneau$ AK ($2.00) $3.00 SouthwestBethel$ 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 Note: this doesn’t account for positive impact on youth, which may produce even fewer smokers over time And additional revenue $$$ for the city

Let’s Do the Math for Juneau  Population: 31,275 / roughly 25,000 adults 18 and older  Approximately 23% of adults smoke (another 4% use “Other Tobacco Products,” not factored in) = 5,750  Current price for a pack of cigarettes is $10  Increase unit price by 20% = local tax goes from $1 to $3  3.6% drop in adult use = 207 fewer smokers (this doesn’t account for reduction in youth tobacco use/initiation)  … and lots of discretionary revenue for the city!

Potential for Local Revenue Based on established models, tobacco tax revenue is highly predictable.

Bethel Tobacco Tax Increase  Dec 2012 – City Council passed $2.00 tax increase and 45% increase on wholesale price of OTP  March 2013 – tax increase took effect and generated and in two months, generated extra $70, for city coffers  City anticipates $300,000 increase to FY 2013 budget (just as CTFK had predicted)

Bethel Tobacco Tax Increase  The City of Bethel passed a $2.00 tobacco tax that went into effect on January 1, 2013  During the first, year the tax generated approximately $445,000 in new revenue*  Bethel is allocating this money to projects that will improve community health *Source: City of Bethel

Bethel Tobacco Tax Increase “ I never expected that much money, 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 dollars for something healthy, something to encourage people, things that might make you not want to smoke.” - Mayor Joe Klejka

Who Can Pass a Tax?  City or Tribal Council - Vote of the Ccouncil  The People - Ballot initiative

Resources  The State of Alaska Tobacco Prevention and Control Program  Grant Program Manager  Technical Assistance Team  Contact: