Anchorage Daily News

The Alaska Supreme Court on Aug. 29 upheld a Matanuska-Susitna Borough tobacco tax enacted in May 2005.

The tobacco tax is an excise tax paid by people who buy tobacco products, bring or ship them into the borough or make them here. The tax runs about a nickel per cigarette, or about $1 a pack. Other tobacco products are taxed at 45 percent of the wholesale price. The borough, in a written statement, said the tax brings in about $5 million a year.

Borough residents Nola Bragg and Link Fannon opposed the tax during the election and, after it was enacted, filed a lawsuit claiming the borough had no authority to enact the tax without voter approval.

Bragg and Fannon campaigned to repeal the tobacco tax in 2005. Voters rejected a repeal measure placed on the ballot.

In its ruling, the Supreme Court upheld an August 2006 state Superior Court decision.

That lower court decision found the borough's state-granted general taxation powers included allowing the excise tax without voter approval.

In their appeal, Fannon and Bragg had argued that Alaska statutes allow the borough to "assess and collect property taxes, sales taxes and use taxes," and that the excise tax fell outside that purview.

Borough Attorney Nicholas Spiropoulos said the court ordered Bragg and Fannon to pay $1,000 in attorney fees. He said the borough asked for an additional $500 in court costs, but the court has not yet ruled on that request.

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