The Ketchikan City Council meets in regular session Thursday, and one of the items on the agenda is discussion of a possible excise tax on tobacco products.
The discussion was requested by Council Member Judy Zenge. City Finance Director Bob Newell wrote up a report on the topic after reviewing similar taxes in other Alaska municipalities.
Cities that do tax tobacco mostly charge $1 per pack of cigarettes, and 45 percent on the wholesale price of other tobacco products. Newell estimates that such a tax could generate up to $552,000 annually for the city.
The tax could be collected from wholesalers, which would minimize administration costs.
One potential problem Newell identified is whether the city would administer tax collection, or whether it would be a Ketchikan Gateway Borough responsibility. The borough is the official tax administrator for the community.
Another issue is how wholesalers would be able to identify tobacco products that are sold within city limits, especially if a retailer has businesses inside and outside of City of Ketchikan boundaries.
Newell suggests that the topic could be brought to the city and borough’s Joint Cooperative Relations Committee for discussion.
He writes that such a tax would require an ordinance, but it would not have to be ratified by voters. It would take effect about six months after ratification, which would give affected businesses time to figure out how to comply.
Also Thursday, the Council will consider a water rate increase, and likely will adopt the 2015 city and Ketchikan Public Utilities budgets.
The meeting starts at 7 p.m. in City Council chambers, with public comment at the start of the meeting.