Tobacco tax foes request summary judgment

February 3, 2006

DARRELL L. BREESE\Frontiersman reporter

PALMER - Wasilla resident Nola Bragg and Link Fannon of Big Lake are moving forward with their fight to undo a tobacco tax the Mat-Su Borough Assembly approved last summer.

They filed a lawsuit in Palmer Superior Court back in August and, earlier this month, submitted a request for a summary judgment in the case.

Basically they are asking the court to rule in their favor, without a trial, based on the evidence presented for the record. Summary judgments are used when there is no dispute regarding the facts of the case, and one party is entitled to judgment as a matter of law.

Bragg said she believes the facts and law are clearly on her side in the matter.

&#8220Looking at the state statute that grants the borough its second-class status limits the taxes that can be implemented,” she said. &#8220It clearly states that the borough can only collect property, sales and use taxes.”

State law prohibits the borough from collecting a tobacco tax and excise tax, Bragg said.

She added that their request for a summary judgment should be granted based on that violation of state law alone, as it establishes that there is no issue of material fact to be tried.

Bragg said borough officials might split hairs and say the tax is a use tax, but that is still not allowed because state law says that any new sales or use taxes initiated by the borough would have to be approved by a majority of the voters.

&#8220No matter what position they take, the decision to implement the tobacco tax belongs to the voters and not the members of the assembly,” Bragg said.

Some would say the people did have that chance when 57 percent of voters chose to deny an initiative brought forward by Bragg to repeal the tax, during the Oct. 4 election.

&#8220That was a vote to repeal an illegal tax,” Bragg said. &#8220It was not a vote in favor of a new tax.”

Anchorage attorney Ken Jacobus, who represents Bragg and Fannon in the case, echoed Bragg's position.

&#8220The Alaska constitution gives all ability to tax to the state and they, in turn, pass the authority on to the cities and boroughs,” Jacobus said. &#8220The borough doesn't have the authority to levy an excise tax, but some Mat-Su officials say no statute specifically prohibits the tax because voter approval is not required. Simply put, the borough doesn't have the authority to levy an excise tax without the approval of the voters.”

He went on to say that the tax serves as both a sales tax, being paid by the consumers, and a tariff on goods being brought into the borough.

Jacobus submitted the request for summary judgment on Jan. 13 and expects the borough to complete its response early next week. Then the borough will have five days to reply before the case is set for Judge Beverly Cutler to hear oral arguments.

If the summary judgment is granted, the borough will have to cease collecting the tax and possibly refund the revenues collected on the purchase of tobacco products.

The borough has collected $2.1 million so far from the tobacco tax, according to borough finance director Tammy Clayton.

Contact Darrell L. Breese

at 352-2267 or darrell.breese@ frontiersman.com.