Tobacco tax’s fate will be in Aspen voters’ hands this November
August 22, 2017
Aspen voters will be asked in November to bless a ballot question aimed at putting a $3 tax on pack of cigarettes and a 40 percent tax on other tobacco products, the City Council decided Monday.
The ballot language still needs to be adopted through a resolution — the City Council will get a gander at several ballot possibilities at its formal meeting next Monday — and also will address raising cigarette pack taxes at a rate of 10 cents annually until it reaches $4.
The council's decision to have voters decide on a tax comes after when in June it raised the purchase age for all tobacco products, including e-cigarettes, from 18 to 21, making it the state's first county or municipality to do so. Its reasoning was that raising the age would deter Aspen's younger set from using and becoming addicted to tobacco products.
The new law takes effect Jan. 1, with the city expecting to forgo the $75,000 it has collected on a yearly basis from state taxes on tobacco sales.
Meanwhile, during Monday's work session city leaders spent about 75 minutes entertaining various ballot scenarios to bring to voters and where exactly to put the funds generated from the sales tax if it's approved.
They agreed on placing the tax proceeds — which the city projects would generate $275,000 yearly in net revenue — into the general fund. However, a line item in that fund would intend for the money to be used for public outreach concerning the ills of tobacco use and other addictive substances that are health hazards.
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Councilman Adam Frisch insisted that the new taxes would not be a "cash grab," and it would be vital to for the city to make clear to voters that the funds generated from the tax would be committed to programs aimed at curbing tobacco use and abuse of other substances.
"I want (the ballot question) to be fairly broad so that the community is better off with the funds we use," Frisch said.
At next week's meeting, the City Council will review "different ballot language with different levels of specificity," City Manager Steve Barwick said.
Councilwoman Ann Mullins, who proposed a $4 flat tax on cigarette packs for voters to decide on, said that approach "would make a statement" she believed voters would support.
And Councilman Ward Hauenstein suggested that rather than seeking a flat tax on cigarettes, have voters decide on a tax rate that would be based on the average wholesale prices of cigarettes among Aspen's six retailers that sell them.
But the complexities involved in such an effort did not win over other council members. Even so, Hauenstein said he would support asking voters to approve a flat rate of $2 or $3 with a 10 cent hike each year until the price reaches $4.
The bottom line for council members was to commit the tax revenue to help curb use of tobacco and other substances.
"More importantly, I want to see the funds used for addiction mitigation," Hauenstein said.
Barwick noted that the $75,000 the city is surrendering in state tax collections has been used for numerous civic services in the past. While money can be used from the general fund however the City Council chooses, Barwick asked that they also consider using the general fund cash for programs that are in line with their intention to create a healthier environment.
Prices for a pack of cigarette in Aspen loom in the $7 range. Should voters pass the tax question, that would put them in the $10 neighborhood. The state's cigarette tax is 84 cents a pack.
Other locales with cigarette taxes include Cook County, Illinois, which has a local tax of $3 per pack with a state tax of $1.98, and New York City, which has a local tax of $1.50 with a state tax of $4.35, according to research by the city's administrators.
In advance of the work session, the city contacted Aspen retailers for feedback about a tobacco tax, and the overall responses were not positive, according to a memo to City Council from Assistant City Manager Sara G. Ott, Finance Director Don Taylor and City Attorney Jim True.
"The most significant factors for opposition were concerns from the retailers that they would see a substantial decline in sales revenue, both directly from reduced tobacco sales as well as a decline in incidental/additional sales resulting from clientele entering the businesses primarily to purchase tobacco products who also purchase items such as food and beverages," the memo states.