Plan riles Philip Morris
Gov. Timothy M. Kaine's proposal to double Virginia's cigarette tax is unfair, the nation's top tobacco company said yesterday, but public health groups called on state lawmakers to quadruple the tax to $1.20 per pack.
"We think it is unfair to single out one industry to bear this tax burden," said Bill Phelps, a spokesman for Henrico County-based cigarette maker Philip Morris USA. A tax increase "would not just negatively impact smokers," Phelps said. "It impacts manufacturers, tobacco growers, wholesalers and retailers." Virginia's current cigarette tax of 30 cents per pack generates about $167 million a year, but smoking-related illnesses cost the state an estimated $400 million a year in Medicaid expenses, Kaine told a joint meeting of the legislature's money committees yesterday. Doubling the tax to 60 cents would raise an extra $148 million to cover part of those costs, Kaine said. "This will bring tobacco products closer to paying for the costs that they create for Virginia taxpayers," he said. A coalition of health groups, including the American Lung Association, American Heart Association and American Cancer Society, said raising the tax to $1.20 per pack would do More to discourage youth smoking and bring Virginia in line with the national average state tax of $1.19. "The biggest impact of a tobacco-tax increase is in youth smoking," said David DeBiasi, director of advocacy and public education for the American Lung Association of Virginia. "Right now we have about 3,500 kids trying their first cigarette every day, and if we can put that cost out of their reach, they are less likely to experiment with Cigarettes and get addicted." Phelps, the Philip Morris USA spokesman, questioned whether the tax increase would produce the desired revenue. He pointed to the company's own research showing that cigarette-tax increases in other states have fallen short of expected revenues. Higher taxes, he said, encourage smokers to cross state lines or go online to buy cheaper Cigarettes. Cigarettes are not the only tobacco product affected by Kaine's budget proposal, which also would change how the state taxes moist smokeless tobacco by shifting the tax formula from a price-based tax to a weight-based formula. "We will be actively lobbying the General Assembly to oppose this," said Gerry Roerty, vice president of legal and government affairs for Swedish Match North America, a Chesterfield County-based tobacco firm.