Fairbanks, Alaska Raises Tobacco Tax

Earlier this week, the Fairbanks City Council voted to raise the city’s tax on tobacco products from 8 percent to 20 percent of the wholesale price, a move that some said brings the city closer to the average tax imposed by cities but still falls short of what some would have liked to see.

According to a report from Alaska Public Radio, the increase had been initially proposed as a way to lessen the property tax burden of residents, but then shifted to be seen as a deterrent for people to take up tobacco usage and vaping, as well as a motivator to get people to quit.  Opponent argued that raising the rate would hurt businesses and possibly shift purchases out of the city or spur illegal markets that would cost the city revenue.

While the state already has a tax rate of 75 percent of the wholesale price of tobacco products, cities can add their own on top of that. In Anchorage, the rate is 55 percent, while in Sitka it is 90 percent. However, not every city has a tobacco tax of its own, with Kenai cited as a city that does not.

The increase goes into effect on Jan. 1, 2024.

With a population of approximately 32,700 people, Fairbanks is the second-largest city in the state.