Highway bill drives home some new tax laws
FairTax petition fails to get White House meeting

More Alaskan cities are taxing cigarettes

From a tax standpoint, Alaska is a pretty cool location.

The Last Frontier doesn't collect any individual income tax. It also doesn't have a state sales tax.

Local Alaskan governments, however, do have the option to collect sales and other taxes. The additional local levies in Alaska cover such things as raw fish (you did see that Deadliest Catch episode featuring the tax collector, didn't you?), hotel and motel occupancy, fuel, gambling proceeds, liquor and tobacco.

Burning cigarette

Right now, one of the most popular local tax collections is on tobacco.

More tobacco taxes in Alaska: A dozen years ago, reports Jeannette Lee Falsey in the Alaska Dispatch News, only the state's three big cities -- Anchorage, Fairbanks and Juneau -- taxed tobacco products. Today smokers will have to hand over enough to cover tobacco taxes in at least 13 jurisdictions.

And, according to Falsey, the tax is not only spreading, it's also increasing in some cases.

Tobacco taxes are popular, in Alaska and elsewhere, because communities view them as a politically acceptable way to raise money. Unlike sales or property taxes, tobacco and other so-called sin taxes appeal to the public's general distaste for bad habits. Plus, at least some of the tax money often goes to public health programs.

But the bottom line is, well, the bottom line. States, or in Alaska's case, cities, like tobacco taxes because they bring in money.

Still, reports Falsey, tobacco taxes are likely not enough to bridge most local government budget gaps. The Alaska Municipal League has created a new committee to examine other ways cities can raise cash, including a state income tax and local or state sales taxes.

Creative tax collection: Alaska cities are not alone in looking for other revenue streams. Sometimes those sources are old ones.

Take the efforts of another "A" state, Arizona. The Grand Canyon state has been going after around 30,000 smokers who bought cigarettes via the Internet as long ago as 2006 and didn't pay the state's sales tax on the packs.

Bankrate Taxes Blog logoAnd the tax bills could be substantial. As I noted last week at my other tax blog, one Arizona retiree was hit with a $4,575 tax bill for his old online cigarette purchases.

Costly state estate taxes: All sorts of other state taxes also were the focus over at Bankrate Taxes Blog last week, as I looked into a study that says many older folks are moving to escape state estate taxes.

While there's no federal estate tax on total assets valued at less than $5.43 million (that's the 2015 exemption amount; it's adjusted annually for inflation), most of the 15 states that still collect estate taxes tend to have much lower levels.

The common tax threshold at which states start getting a piece of what's left behind is $1 million. To avoid leaving a large estate to fall prey to state tax departments, the only option is to move.

I usually post my tax thoughts at Bankrate Taxes Blog on Tuesdays and Thursdays. If you miss them there, check here at the ol' blog over the weekend for highlights and links.

You also might find these items of interest:


Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.