Tobacco tax off to court

Lawsuit argues borough has no right to levy excise tax

November 20, 2005

DARRELL L. BREESE/Frontiersman reporter

PALMER - After taking their challenge of the tobacco tax to the voters without success, two local residents are taking their fight to the courts.

Attorney Ken Jacobus filed a lawsuit Thursday in Palmer Superior Court on behalf of Wasilla's Nola Bragg and Link Fannon of Houston. The lawsuit seeks to repeal the $1-a-pack tax on cigarettes and other tobacco products the Mat-Su Borough Assembly approved in May.

Jacobus stated that the borough doesn't have the authority to levy an excise tax. But Mat-Su officials say no statutes specifically prohibit the tax because voter approval is not required.

&#8220State law allows the borough to implement property, sales and use taxes. It doesn't discuss excise taxes,” Jacobus said.

That is also likely to be the argument presented by the borough in its defense. Borough Attorney Teresa Williams advised the assembly, in a memo dated May 12, that there were no statutes specifically prohibiting an excise tax on tobacco.

She concluded that since there was no statutory requirement for voter approval of the tax, that a vote by the assembly was all that was necessary.

The power to create taxes without consulting the people is what troubled Bragg the most.

&#8220They didn't even ask the voters if they wanted to be taxed,” Bragg said. &#8220This is America and the people should have a say and a chance to vote.”

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

Bragg considered using the term &#8220excise tax” as a means of keeping the voters out of the loop as the borough implemented what she calls a sales tax.

&#8220If this is not a sales tax or a use tax, then what is it?” Bragg asked. &#8220But if it is determined to be a sales tax or use tax, then it has to be approved by the voters.”

Bragg also questioned the actions of the borough assembly in passing the tobacco tax.

&#8220They've tried six times to get a sales tax, and each time the voters said no,” Bragg said. &#8220Then when they wanted a severance tax on gravel in the last election, they put it before the voters. Why didn't they ask the voters about the tobacco tax?”

If the lawsuit is successful in striking down the tax, the borough will have to cease collecting the tax and refund the revenue collected on the purchase of tobacco products.

A hearing date in the case has not yet been set, according to online court records.

Contact Darrell L. Breese at

352-2267 or darrell.breese@

frontiersman.com.