Va. May Raise U.S.’s Lowest Cigarette Tax

Plans to raise Virginia’s cigarette tax have always wound up in the legislative ash heap, snuffed out by the politically muscular tobacco industry and lawmakers keenly aware of state’s 400-year history of reliance on the golden leaf.

As other states have raised cigarette taxes as high as $1.51 per pack to replenish depleted state treasuries and discourage teen smoking, Virginia held fast at 2.5 cents – the nation’s lowest tax on a pack of smokes – even when faced with unprecedented budget shortfalls.

Now, legislators say 2004 is likely to be the year Virginia takes aim at tobacco.

As part of a tax reform package, Democratic Gov. Mark R. Warner has proposed upping the state’s cigarette tax to 25 cents per pack and allowing all localities to impose an additional tax of up to 50 cents.

Warner estimates the increase would produce an additional $150 million annually for his treasury. He has said the state would face a $1.2 billion shortfall if lawmakers don’t adopt his tax reform package.

“I really think we are going to increase the tobacco tax this year,” said Republican state Sen. Emmett W. Hanger, but he added, “I don’t think we’ll get anywhere near the governor’s proposal.”

A cumulative increase of up to 75 cents per pack would be “overly punitive to the tobacco industry,” Hanger said.

Seventy-five cents per pack still wouldn’t be anywhere near the highest taxes in the country. New York state last year increased its cigarette tax to $1.50 per pack, and New York City imposed another $1.50 tax, bringing the cost of a pack of cigarettes to more than $7 in New York City.

Massachusetts taxes cigarettes at $1.51 per pack, New Jersey’s state tax is $1.50, and Washington state’s is $1.42.

In Virginia, cigarette tax debates have historically pit public health advocates against the tobacco farming and manufacturing lobbies – a mismatch in a state where tobacco remains the No. 1 cash crop and factories produce billions of cigarettes annually for sale worldwide.

Philip Morris, which operates the world’s largest cigarette factory in Richmond, promptly denounced Warner’s proposal as “excessive.” However, company officials declined to say whether they will actively oppose a tax increase as they have in the past. As recently as last winter, Philip Morris helped kill legislation that would have increased the tax to 60 cents per pack.

The Virginia Farm Bureau will fight the proposal, lobbyist Martha Moore said. “We feel this is singling out one farm commodity,” she said.

But Virginia Lung Association spokeswoman Kendra Powell and Michael Berman, spokesman for the Campaign for Tobacco Free Kids, have hope for a tax increase going through. Berman said every 10 percent increase in the price of a pack of cigarettes leads to a 7 percent decrease in youth smoking.

“It’s been a long, long fight,” Powell said. “We still have a battle ahead of us, but we’re optimistic. We’re going to save lives with this increase.”

Some smokers aren’t happy with the prospects and say a higher tax won’t make them quit.

“It’s ridiculous,” Rhonda Pusloskie said between drags of a Marlboro outside a Richmond office building. “They get enough money off us already.”