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Tobacco Taxes

Explore the impact of local tobacco taxes in Alaska and how they reduce smoking, generate revenue, and promote public health initiatives.

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Tobacco Taxes

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  1. Tobacco Taxes Local Taxes in Alaska

  2. Looking at the Bigger PictureA Public Health Perspective • Tobacco Taxes are an “Access” issue • What are some other access issues that 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

  3. 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 http://www.thecommunityguide.org/tobacco/increasingunitprice.html • Added Bonus: Potential revenue for your community

  4. “It's not a hard concept to grasp -- as taxes on cigarettes go up, sales of cigarettes go down.” -Convenience Store News, 2009

  5. Price Vs. Consumption

  6. 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

  7. In their own words… And what do tobacco companies say about taxes?

  8. “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

  9. “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

  10. “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

  11. Industry Resources Devoted to Fighting Taxes • California Proposition 29 – Spring 2012, 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

  12. Industry Resources Devoted to Fighting Tobacco Taxes • Heart/Lung/Cancer spent $3.5 million for campaign (1/2 from Lance Armstrong Foundation) • Californians Opposed to Out of Control Taxes & Spending spent$40 million war chest (approximately ½ from Philip Morris & RJR) • June 2012 vote: 49.8% in favor - 50.2% opposed

  13. How much tax? What does the research say?

  14. A 20% Increase on Unit 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. http://www.thecommunityguide.org/tobacco/increasingunitprice.html

  15. What kind of tax? • Unit based tax • Ad valorem tax (percentage) • Weight based

  16. Local Tobacco Taxes in Alaska

  17. AK State & Local Cig. Taxes as of December 31, 2012

  18. 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 (this doesn’t account for positive impact on youth) • And additional $$$ for the city

  19. Potential for Local Revenue The Campaign for Tobacco Free Kids estimated that a $1 tax on cigarettes in Bethel would raise $297,000, result in 23,000 fewer packs of cigarettes smoked and reduce youth smoking by 11.4%. Their estimate was spot on

  20. Bethel Tobacco Tax Increase • Dec 2012 – City Council passed $2.21 tax increase & 45% increase on wholesale price of OTP • March 2013 – tax increase took effect & generated and in two months, generated extra $70,681.52 for city coffers • City anticipates $300,000 increase to FY 2013 budget (just as CTFK had predicted)

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

  22. Bethel Tobacco Tax Increase • Decision that $$$ would go to parks and recreation for one time projects including a walking path and the YK Regional Aquatic Center • In May 2013 – cig tax generated $45,668 • In June 2013 – cig tax generated $31,000 Overall consumption of tobacco products in the community of Bethel has definitely decreased

  23. Who Can Pass a Tax? • City or Tribal Council - Vote of the council • The People - Ballot initiative

  24. Resources • For more information about local tobacco taxes in Alaska call

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