Fairbanks council OKs more than doubling city’s tobacco tax to 20%

A person using their Juul Vape (Joey Mendolia/Alaska Public Media)

The Fairbanks City Council voted this week to increase the city’s tobacco excise tax from 8% to 20%, after a discussion about effects on public health and local businesses.

The tobacco tax increase ordinance was proposed to lessen the property tax burden, but that’s not what most people who testified at Monday’s Council meeting talked about.

Jamie Morgan, speaking on behalf of the American Heart Association, said raising the tobacco tax — which also applies to vaping products — discourages their use.

“Increasing the tax on tobacco is a proven method to protect youth from these deadly products,” Morgan said. “Teenagers are especially price-sensitive, so a higher tax will stop many young people from becoming addicted in the first place, and from developing life-threatening diseases like heart disease, lung cancer, stroke and other chronic diseases.”

Vaping is popular with young people — but like tobacco, vaping products cannot be legally purchased by those under 21. Vape shop owner Alex McDonald said he cards everyone who comes into his business.

“Kids aren’t getting them through brick and mortar stores,” McDonald said. “If we sell to kids, we get shut down.”

McDonald said vaping helps people quit smoking, and increasing the tax would result in some former smokers going back to cigarettes.

“It’s counter to public health to highly tax products which people use to quit the leading cause of premature death in this country,” he said.

Another speaker, Jasmine Rios, echoed McDonald’s concern that a higher tax could have other unintended consequences.

“(It) could unintentionally foster the growth of illegal markets where underage sales go unchecked, and the government again receives no revenue,” Rios said.

Local Alaska tobacco taxes range from none in Kenai to 90% in Sitka, with Anchorage in between at 55%. Tim Lamkin testified in support of the tax increase, emphasizing that Fairbanks is on the low side.

“Twenty percent would move you closer to average, but certainly still under the statewide of those communities that have so far chosen to tax it. There are more and more communities choosing to do so, recognizing the threat these products are presenting.”

Lamkin, who has worked on tobacco and vape tax issues for the state Legislature, said the statewide average among communities which tax tobacco and vape products is 39%. Council member Lonny Marney said the tax hike must be weighed against the problem of kids vaping.

“How do we not penalize businesses that are in this, but keep our kids safer?” Marney said.

Marney called bumping the tax to 20% a good start, adding that impacts of the change should be monitored.

The council unanimously approved the tobacco tax increase ordinance. It takes effect on Jan. 1.

CorrectionAn earlier version of this story misspelled Jim Lamkin’s last name as Lampkin.

Dan Bross is a reporter at KUAC in Fairbanks.

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