Richmond overhauled the state's tax code in spring 2004 amid claims of needing to right Virginia's fiscal direction.
In addition to raising the state sales tax and beginning a phase-out of tax age deductions, the state approved a 17.5-cent increase on packs of cigarettes effective Sept. 1, to the delight of anti-tobacco lobbyists.
A second 10-cent hike will take effect July 1, 2005, bringing the total state tax per pack to 30 cents.
Prior to the hike, the state had the lowest tax rate in the nation -- 2.5 cents per pack -- and legislators last increased the tax on cigarettes in 1960.
The state is not alone in raising cigarette taxes. Six other states also increased their cigarette taxes this year, including Pennsylvania, Alabama, Hawaii, Michigan and Rhode Island. Sixteen states in 2003 and 21 states in 2002 also raised their excise tax rate for cigarettes.
The nationwide average cigarette tax is 84 cents, and even with the raised 20-cent tax rate, Virginia's tax rate still ranks 45th in the nation.
Other Southern states lag even further behind the national mean. Major tobacco states' average tax rate is 15.3 cents, according to the Washington, D.C.-based Campaign for Tobacco-Free Kids.
To the west, Kentucky has not increased taxes on cigarettes in more than 30 years and, with Virginia's increase, the Bluegrass State now has the lowest cigarette tax at 3 cents. North Carolina's tax rate stands at 5 cents, South Carolina's at 7 cents.
Projected state fiscal and health benefits
Public health lobbyists who championed the legislation said with the hikes, they foresee a significant impact on the overall wellbeing of state residents.
The American Lung Association of Virginia estimated with less consumption and pervasiveness of smoking, the increases will prevent 24,000 Virginian children from becoming smokers, inspire 21,000 current smokers to stop and prevent 12,000 smoking-caused deaths.
Campaign executive director William Corr hailed the passage of the legislation in April as "an historic step toward protecting kids and taxpayers from tobacco's devastating toll in a state that is home to the world's largest tobacco company."
Corr described the scheduled increases as "a public health and fiscal victory for Virginia," which would reduce smoking and save lives.
Campaign research director Danny McGoldrick said collected studies show a 10-percent increase in the total price of cigarettes reduces consumption overall by four percent. Such a hike decreases the prevalence of adult smokers by two to three percent and youth smokers by six to seven percent.
The average pack of cigarettes costs $3.20, according to Virginians for a Healthy Future, a coalition of state public health groups. The full 27.5-cent tax rate will represent an 8.5-percent increase in the total cost of a pack.
McGoldrick said every state that has raised tobacco tax has seen revenue go up even with consumption going down.
Once the entire two-staged tax increase is implemented, the state should see a boon of $575.6 million over the next five years, according to Campaign projections. The Campaign also estimated the state long-term healthcare saving would total $69.2 million.
The state projects the 20-cent tax will generate $108.9 million in the 2005 fiscal year, according to information provided by Gov. Mark R. Warner's press office. Effective July 1, 2005, the 30-cent tax will generate $175 million.
Beginning March 1, 2005, a 10 percent tax also will be enforced on non-cigarette tobacco products. The state forecasts the bump will raise an additional $4.9 million in revenue in fiscal year 2005 and $20.4 million the following.
"It's a win-win situation -- a win for public health and a win for state budgets," McGoldrick said.
Impact on student consumption
Sitting near Clemons Library, University research assistant Phillip Honenberger, 22, said he is addicted to smoking; and though he has attempted to quit twice, he has resigned himself to being a smoker.
Because of the tax increases, the American Spirits-smoker said he does try to hunt for bargains but will not start smoking lower quality cigarettes such as Camel Lights, though he has entertained the notion.
Honenberger said his American Spirits cost between $4.15 and $5.25 a pack in Charlottesville.
He said he probably would only stop if cigarettes were made illegal or if they became astronomically expensive.
"If it was $10 a pack and the (nicotine) gum was $40 for two weeks, I might switch to the gum," Honenberger said.
Corner Market owner Chaney Kent said the increased cigarette tax has not impacted his sales to students. On Thursday, Friday and Saturday nights, especially, students still stop by to pick up packs before going to bars, Kent said.
Some local non-student residents, however, have switched to less expensive, generic brands like Bailey's or Doral since the increase, Kent noted.
Lucky Seven employee Jenessa Misevich said the hike has had little impact on sales and agreed with Kent that students continue to purchase higher brand cigarettes such as Parliament Lights, Marlboro Lights and Camel Lights.
This prognosis, however, runs counter to experiences at the Elson Student Health Center.
According to interim director for health promotion Alison Beaver, more students are coming to Student Health to seek help in quitting.
Beaver attributed the increase to the two contemporaneous factors of the bump in cigarette taxes and greater publicity of student health services offered.
During the spring semester, only a handful of students sought out assistance, while this semester Beaver said she meets with at least two students a week. Students who come to the office are provided with information about quitting in a 30 to 45-minute information session.
During the "Great American Smoke Out" held the week before Fall Break, 160 students -- more than double the number of students the previous year -- filled out cards pledging to either quit or look into kicking the habit. The swell probably in part can be credited to the iPods Crutchfield donated to the effort and other raffles, Beaver said.
Solid statistics concerning impact on consumption will not be available for 12 to 18 months, said Donna Reynolds, director of community relations for the American Lung Association of Virginia.
Reynolds maintained, however, that previous studies show increased price does result in decreased consumption.
In the upcoming legislative session, Reynolds said her organization will not push for further tax hikes but seek to maintain and prevent erosion to the current increases.
The association will lobby for legislation to restrict public smoking.
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