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Governor Proposes Tobacco, Transient Taxes


March 19, 2004
Friday - 1:10 am

Governor Frank Murkowski has introduced legislation calling for a one-dollar-per-pack increase in the tax on cigarettes, and a transient accommodations tax on shore-based and cruise ship overnight stays. Increasing the tax on tobacco would raise an estimated $35.5 million annually, while the transient accommodations tax would bring in about $49 million.

Murkowski said he has multiple objectives in raising the tobacco tax. "This bill will raise revenues to the state, which currently collects only $47 million in tobacco taxes, an amount that doesn't even begin to cover the state's actual costs of tobacco-related illnesses," he said. "And, as statistics show, increasing the tax will reduce smoking, especially among teenagers, who are very sensitive to increases in price."

Emily Nenon, Advocacy Director the American Cancer Society in Anchorage, applauded the introduction of the tobacco tax bill. "Tobacco taxes are one of the best ways to reduce youth smoking," she said. "We know that tobacco tax increases will save lives. It has worked here in Alaska, as well as across the country. There is no longer any doubt that tobacco taxes are a proven means to reduce tobacco use and save lives."

Murkowski said the Centers for Disease Control estimates the costs for direct medical expenses for Alaskans who die from smoking-related illnesses were $133 million in 1998. The CDC estimates another $137 million was lost in productivity from tobacco-related deaths in 2001. On the other hand, long-term health care savings that would be attributed to the doubling of the tobacco tax are estimated at $146 million.

The transient accommodations tax applies a 5 percent sales and use tax to a broad range of activities, such as items sold on cruise ships, shore-side activities, overnight accommodations, and guided tours. It is estimated to bring in about $32 million in new revenue.

"With this revenue proposal, we are being careful not to single-out any specific industry or group, but are attaching the fee to the service of accommodating travelers in Alaska," Murkowski said. "The state of Alaska provides many valuable services for travelers of all kinds, whether they are from outside Alaska or state residents. This modest fee will provide a stream of revenue to the state to help offset the rising costs of providing those services, such as trooper and police protection, highway maintenance, harbors, parks, airports, and so on."


Source of News Release:

Office of the Governor
Web Site


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