Aspen council eyes $10 cigarettes in town with possible $4 flat tax
August 7, 2017
Prices for cigarettes and other tobacco products in Aspen will see a substantial increase in the event that voters approve a local tobacco sales tax this fall.
The Aspen City Council agreed Monday to direct city staffers to continue their work on drafting a ballot question that would go to voters in the November election. The question could pose adding as high as a $4 tax on cigarettes and 40 percent tax for chewing tobacco.
The city has until Aug. 28 to formalize the ballot question for November. If passed, the local tobacco tax would take effect Jan. 1.
That's the same day Ordinance 17, which City Council passed in June and raises the age to purchase tobacco products and e-cigarettes from 18 to 21, takes effect. By doing so, Aspen became the first municipality or county in Colorado to raise its tobacco-purchase age.
Councilman Ward Hauenstein said his only concern was the “balance between being a deterrent [to tobacco use] and a regressive tax.”
The council increased the age in response to an effort by local health care providers, led by Pitkin County Medical Officer Dr. Kimberly Levin, to deter young adults from using tobacco. The ordinance also was supported with letters to the council from Aspen School District Superintendent John Maloy, Aspen Valley Hospital CEO David Ressler and Aspen Chamber Resort Association President Debbie Braun.
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By raising the purchase age, the city will forgo annual revenue of roughly $75,000 that it collects in state tobacco sales revenue.
A voter-approved tobacco tax, however, would help offset that loss, the city's Environmental Health director, CJ Oliver, told the council at its work session. And, noted Councilman Adam Frisch, "The price of cigarettes have a huge effect on young people starting."
The council agreed in principle that money generated from the new tax would be dedicated to the general fund, which the city can use for any number of products and services. However, Frisch said if the money is placed in the general fund, it should be used for tobacco-prevention and education programs. Councilman Ward Hauenstein also suggested using the money to buy products, such as nicotine patches, that help arrest tobacco addiction.
Two taxing scenarios are at play.
The city could ask voters to approve a flat-rate tax of up to $4 to buy a pack of cigarettes. Or it could ask voters to approve a percentage-based tax.
A $4 flat-rate would allow the city to possibly charge a lower rate when the tax takes effect, while later raising it to as high as the maximum rate without requiring additional voter approval, city attorney Jim True said.
One pack of cigarettes commands an average of $6.50 at Aspen's service stations and $5.60 at the supermarkets, according to a memo to the City Council. Those prices include a state tax of 84 cents. With the new tobacco tax, either a flat-rate or percentage-based, a pack of smokes could approach the $10 mark or higher.
For chewing tobacco, the city is eying a potential tax of up to 40 percent. Chewing tobacco averages $4.29 per pack at Aspen's gas stations and $4.82 at its grocery stores. A 40 percent tax would push those prices past $6.
Hauenstein said his only concern was the "balance between being a deterrent [to tobacco use] and a regressive tax."
"Certainly the people on Red Mountain, they won't be concerned," he said, adding that "from a philosophical" point, he wondered if the tax "is more of a burden on people of the lower income level."
While Hauenstein said he would support a $4 tax on cigarettes, "I am somewhat sensitive to the regressive nature."
Frisch said he supports having voters decide on a tax rate that is "high as possible," but he tempered that remark by noting that it could create a black market in Aspen for people "hawking cigarettes out of the back of their trunk."
Seven retailers sell tobacco products within city limits, including the pro shop at Aspen Golf Club, which the city owns and operates. That caught Councilman Bert Myrin's eye, who said the city should stop allowing tenants in any of its buildings from selling tobacco products.
"Future leases [in which the city is landlord] should exclude tobacco sales from moving forward," he said.
"We shouldn't sell a product that we acknowledge is dangerous to your health," he said.