Featured, Jefferson County, Lakewood, Local, Original Report, Sherrie Peif, Taxes

UPDATE: Lakewood looks at sending huge tobacco tax to ballot; would set metro-area precedent

UPDATE: The Lakewood City Council passed the tobacco tax measure discussed in this article on first reading, as part of a broader consent agenda package, at the Monday, June 14 council meeting.  It now moves on to public notice, and public comment at the Monday, June 28th regular council meeting. For more information, visit Lakewood’s website here.

LAKEWOOD — Consumers purchasing tobacco products in Lakewood could see a pack of cigarettes jump as high as an additional $4.50 per pack if voters approve a significant tax-hike proposition the city council is expected to place on the November ballot.

The tax would also be assessed on all tobacco and nicotine products including cigars, chew, electronic cigarettes, and all other methods of vaping.

Although voters in the communities of Aspen (15 cents per cigarette and 40 percent on all other tobacco), Crested Butte (15 cents per cigarette and 40 percent on all other tobacco) and Glenwood Springs (20 cents per cigarette and 40 percent on all other tobacco) have recently passed similar taxes, Lakewood would be the first metro-area city to impose such a special tax, worrying some council members that it would cause residents to buy their tobacco products outside the city.

Even high-tax Boulder only imposed its 40 percent tax increase on electronic tobacco products.

Measure allows up to 50% tax

In 2019, the state legislature made it possible for cities and other local governments to charge their own taxes on tobacco by forgoing their share of state excise taxes.

At a May 3 work session, council members discussed whether to ask voters for a special tax on cigarettes and other tobacco that could raise an estimated $20 million a year or more based on what the final numbers are.

“Every time we look at tax increases, we always are looking at those who are smoking and the retail stores,” said councilwoman Ramey Johnson. “And they have really been targeted and singled out for taxation all along. I’m having a little trouble with us always telling people what vices they should have.”

Staff presented the council initially with a 30 percent increase — or .13 cents per cigarette — but in documents on the city’s website that number is now 20 percent with the added caveat that city council can bypass voters in the future and raise that number on their own up to 50 percent.

The funds would also be exempt from revenue caps under the Taxpayer’s Bill of Rights, allowing the city of Lakewood to permanently retain and spend all revenue collected.

Although ballot language says it would be for use on education and public health programs associated with tobacco and nicotine consumption, it also includes “other general expenses” as possible use.

Even a 20 percent jump in taxes would increase the city’s revenue stream by just under $20 million per year, and there is nothing in the published language that would limit how soon council could raise the tax, essentially allowing a jump to 50 percent as soon as the initiative is passed by voters,

A 20 percent increase would immediately raise the cost of a pack of cigarettes from its current cost of $9.57 per pack to $11.36 per pack after all state, local and excise taxes are added. Those numbers increase to reflect a 30 percent increase to $12.25 per pack, 40 percent to $13.17 per pack and 50 percent to 14.04 per pack.

Councilor want to “go to the max”

“I’m not at all concerned that we would be overpricing cigarette to where people would have to go extra length or a few more miles to get them,” said councilman Charley Able during the work session. “The higher a price we put on this, the fewer the people will be purchasing things that harm them. I’m not at all reluctant to take something out of our revenue stream that causes such harm as cigarettes and cigarette products, so if we lose revenue, fine, on this one I think we need to go to the max.”

Lakewood resident Natalie Menten called the initiative double taxation, as the council voted in April to stop receiving their share of the excise tax; however, consumers must still pay the full excise tax, which amounts to $1.94 on every pack.

“We just had proposition EE, which jumped taxation on tobacco users, and now the city of Lakewood is singling out a legal adult choice with an excessive proposal,” Menten said. “What’s next? Obesity? Alcohol? It’s a slippery slope. It’s persecution. It’s an additional tax on top of already high taxes to the tune of $1,100 per year (based on a 30 percent increase) for the veteran or other adult tobacco users who choose a legal behavior. What a level of disrespect. How is it fair to target this segment once again?”

Councilwoman Anita Springsteen also has concerns about who the tax targets.

“I find it somewhat discriminatory,” Springsteen said during the meeting. “It’s a disparate impact on low-income people and will drive businesses out of Lakewood.”

The council will have first reading at its regular meeting at 7 p.m. on Monday, June 14.

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