Cigarette Tax Will Go Up on
June 11, 2007
The Alaska Department of Revenue will begin collecting a higher
rate of tax on cigarettes beginning July 1st. The tax will go
up by twenty cents on a pack of cigarettes, or from the current
rate of nine cents per cigarette to ten cents. This increase
is the final increase in a series of phased-in increases established
by the legislature during a special session in June of 2004.
The tax increase legislation did not include a floor stock tax
which means cigarettes physically in the state on or before June
30th will be taxed at the old rate of $.09 per cigarette. Cigarettes
imported into the state after June 30th will be taxed at the
new rate of $.10 per cigarette. These rates apply only to certain
cigarettes manufactured by companies that are signatories of
the Master Settlement Agreement (MSA), a 1998 agreement between
46 states and several major tobacco companies.
The tax rate on cigarettes manufactured by nonparticipating manufacturers,
those who did not sign the Master Settlement Agreement (MSA),
will increase from $.1025 per cigarette ($2.05 per pack of twenty)
to $.1125 per cigarette ($2.25 per pack of twenty).
The Tax Division deposits cigarette tax revenue into both the
School Fund and General Fund. The School Fund receives $.038
per cigarette. The remainder of the cigarette tax, including
the entire amount of the cigarette tax increases passed during
the special legislative session is deposited in the General Fund.
In addition, the legislature may appropriate 8.9% of the receipts
deposited in the General Fund to the Tobacco Use Education and
Cessation Fund for tobacco cessation programs.
The Alaska cigarette excise tax is paid through the use of tax
stamps. According to the Alaska Department of Revenue, cigarettes
sold or possessed in the state that do not bear a valid tax stamp
are contraband and are subject to immediate seizure.
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