Anchorage Tobacco Tax Earnings Might Signal Smoking Decline

April 25, 2012|By Jason Lamb | Channel 2 News

ANCHORAGE, Alaska — Anchorage's chief fiscal officer says the city's latest revenue projections for last year might indicate that more people are choosing to quit smoking.

Chief fiscal officer Lucinda Mahoney said Anchorage collected $21.3 million in tobacco taxes last year -- that's about $1.6 million less than Mayor Dan Sullivan's financial team was expecting for 2011. Mahoney made the announcement during a presentation in front of the Anchorage Assembly on Friday, where she outlined the performance of several city revenue streams throughout 2011.

"I kind of think of it as a good thing," Mahoney explained. "If we incentivized some folks to stop smoking as a result, this is overall good."

Mahoney says fewer cigarettes were sold in Anchorage than last year. The lower-than-expected revenue report follows a 75-cent-per-pack tobacco tax increase that went into effect in the beginning of 2011.

It's a tax hike that some Anchorage tobacco shop employees say has put a big dent in their bottom line -- just like the city's coffers. They say the drop in tobacco tax revenue may not point to people choosing to quit. Rather, it may signal that people are driving to the Mat-Su Valley -- where tobacco taxes are less expensive -- to purchase cigarettes.

"Anchorage alone has so much in taxes that we have to jump our prices up," said Tudor Smoke Shop cashier Kimber Negus. "We can't compete with the valley because they don't have our taxes."

In addition to city tobacco taxes, which amount to about $2 per pack of cigarettes, the state and federal government also tax tobacco. In Anchorage, more than half the cost of an $8 pack of cigarettes consists of taxes.

Anchorage's city treasurer, Daniel Moore, says it may be reasonable to assume that a tobacco tax increase encouraged some people to quit smoking, but the city finance department does not specifically track that data.

|

|

|