Virginia - cigarette sales declined after tax hikes..

January 26, 2009 - As Gov. Timothy M. Kaine seeks to double the state’s tax to 60 cents on cigarettes to get more money for health care, state statistics show that cigarette sales declined after the previous two rounds of tax increases. Cigarette packs sold in Virginia in fiscal years 2004-2007 decreased from 719.6 million in 2004 to 617 million in 2005 to 597 million in 2006 and to 581 million in 2007. The state tax on a pack of cigarettes went from 2.5 cents a pack to 20 cents a pack on Sept. 1, 2004, as part of then-Gov. Mark R. Warner’s $1.4 billion tax increase. It then went to 30 cents a pack on July 1, 2005.

Del. Harry R. Purkey, R-Virginia Beach, chairman of the House Finance Committee, says the panel likely will take up Kaine’s proposed tax increase this week. He rated its chances as iffy. While he hasn’t polled the committee’s members, Purkey said, “I think it has a difficult chance of passing. It has some supporters, but there is an awful lot of opposition from the public as well as the business community.”

Altria and its Philip Morris Tobacco subsidiary, one of the area’s largest employers, oppose the increase. “We think it’s unfair to single out one industry to bear the tax burden, particularly here in Virginia where Altria is a major employer,” Phelps said. Altria and Philip Morris employ more than 5,000 people, most in the Richmond area.

According to an internal study prepared for Altria, states approved 57 excise tax increases between fiscal year 2003 and fiscal 2007. Only in 16 cases did the states’ tax revenues meet projections.

Related news briefs: Virginia Governor Kaine Proposes a 30 cent tax increase in cigarette tax...

Reference: Kaine plan for budget could curb smoking by Tyler Whitley, Media General News Service, NewsVirginian.com, 1/25/2009.