Virginia House Finance Committee defeats tobacco tax increase..

January 30, 2009 - The Virginia House Finance Committee defeated (by a vote of 8 to 2) a proposal by Gov. Timothy M. Kaine (D) to double the tax on cigarettes in a state. Both Republicans and Democrats said they oppose raising taxes on a single industry during tight economic times, especially when that industry provides the state with so much money. The Senate will vote on an identical bill next week, leaving open the possibility that the legislature's budget negotiators could still consider the tobacco tax as a source of revenue for the state's cash-starved $77 billion, two-year budget.

If legislators reject the idea of raising the state's tax on cigarettes from 30 to 60 cents per pack, they will have to find another way to come up with $148 million to pay for Medicaid at a time when the state faces a shortfall of at least $2.9 billion.

Del. James P. Massie III (R-Henrico) said he was opposed for several reasons, including wanting to protect one of the world's largest cigarette makers, Philip Morris, which in recent years has moved its headquarters to Richmond and opened a research center there. Tobacco was once the foundation of Virginia's economy, and the state is still home to thousands of tobacco farms. Altria, the parent company of Philip Morris, employs more than 5,000 workers.

Altria spokesman Bill Phelps: "We continue to believe that the tax . . . could negatively impact Virginia manufacturers and tobacco growers and retailers and the jobs that they provide."

Virginia House Finance Committee defeats tobacco tax increase..

Reference: House Panel Rejects Bill To Hike Tax On Cigarettes Kaine Sought to Double Levy to 60 Cents a Pack by Anita Kumar, Washington Post Staff Writer, 1/29/2009.

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