Charlottesville may soon see a large increase in cigarette taxes, City Council made clear Monday night. The tax served as a focal point of Council discussions along with the annual budget and appropriations process.
The proposed tax hike would increase the price of a pack by $0.20 — raising the tax from $0.35 to $0.55 cents.
The Cigarette Tax Ordinance Change would be the first tax raise on cigarettes since the current rate was established in 2008. At that rate, the tax brought in an estimated $585,000 in revenue in during the 2013 fiscal year. The new rate is set to bring in an additional $265,000, and has been included as an added revenue source in the budget plan for the 2015 fiscal year.
Compared to other municipalities in Virginia, the current rate is well below the state average, which is $0.44 per pack. Tazewell has the lowest rate — $0.03 a pack — while Fairfax City has the highest rate at $0.85.
“Raising the tax by 20 cents is reasonable,” Councilmember Kristin Szakos said. “We are already very low compared to other cities and localities in Virginia.”
Nevertheless, many Charlottesville business owners fear potential changes in economic behavior by smokers, which could hurt profits on cigarette sales. Albemarle County levies no local taxes on cigarettes, which some said may lead smokers to drive the extra distance in search of cheaper prices.
Dissenters of the tax hike attacked it on the grounds it was being used to change behaviors — not addressing the ability for the tax to raise funds.
Carole Thorpe, chairperson of the Jefferson Area Tea Party, denounced Council for using taxes in a way which did not conform to their original purpose.
“It is not our understanding that taxation should be used as a tool for behavior modification which to us is the intention of the Council,” she said.
Thorpe further expressed concerns about the effect the tax would have on residents.
“Income that is earned by the workers of Charlottesville is used to provide for their families,” she said. “It should be taken in taxation only when necessary and only when needed to provide proper functions of government.”
Council’s response came from Szakos, who expressed the economic and health benefits of the tax increase.
“There are other options to raise revenue in the city, but the reason I support this is that it’s good for our citizens’ health,” she said.
Citing the Centers for Disease Control, Szakos said that, “[smoking] costs the public $10.47 for every pack sold in health costs and lost work.”
In Virginia, which consistently ranks low in the American Lung Association’s scoring of the state’s tobacco policies, youth smoking poses a problem. According to their research, 15 percent of Virginia high schoolers smoke regularly.
“A 10 percent rise in price reduces smoking by 5 to 10 percent, and especially youth smoking,” Szakos said.
Mayor Satyendra Huja motioned for a vote on the ordinance which was seconded by the Council. The vote will be held at the next Council meeting in two weeks.
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