DANVILLE, Va. (WFXR) — Virginia’s state legislature is currently considering raising the Commonwealth’s cigarette tax, which some experts fear could hit poorer individuals the hardest.
“The weight of the cigarette tax falls very disproportionately on lower-income folks. So I think they pay six percent of their incomes on cigarettes, tobacco, etc. – someone making $70,000 a year spending about 0.25 percent. Just way less on cigarettes,” said Dr. Dave Brat, dean of Liberty University’s School of Business.
The state’s current tax is the second-lowest in the country: one-and-a-half cents per cigarette, 30 cents per pack, or three dollars per carton.
In his December 2019 budget overview, Governor Ralph Northam suggested doubling that to help pay for state-sponsored health insurance.
“Here in Virginia, we pride ourselves on being a low-tax state. But it makes no sense to cling to the bottom of the rankings for a product that costs us so much,” he said, pointing to the more than $3 billion in direct yearly health costs brought on by smoking in Virginia.
He argued Virginia’s newly-doubled statewide rate would still be lower than every neighboring state aside from North Carolina, whose border happens to be just down the street from Sunrise Gas Station in Danville.
Cashier Lisa Ighnet says she doesn’t buy the idea that smokers will quit smoking based on a tax increase alone.
“No, they’re going to smoke regardless. I’ve realized that,” she said. “They’ll complain about it, but they’re still going to pay it.”
She says she’s not sure how the tax will affect business, but agrees it would be simple to drive another few minutes down the road to save money.
The Virginia proposal would make taxes 33 percent higher in the Commonwealth than in North Carolina, whose cigarette tax is 45 cents per pack.
“My dad, actually, he used to go across the bridge literally just to get the entire carton because it was much, much cheaper,” said China Oakley, who is originally from Maryland.
She says she’s not only disappointed in the tax itself, but what the tax could mean for poorer communities.
“It’s just like – at this point, what money are we going to have left to live with?” she said. “They just really need to consider all of the lower class families that they’re taxing real high like this because we don’t have all these backup plans.”
What’s more, there is at least one bill currently being considered by the state legislature to make the cigarette tax even higher.
HB 1120 would increase the 30-cent rate for a pack six-fold to $1.80, and would include electronic smoking devices in the definition of “tobacco product.”
“The government’s always in a catch 22,” Dr. Brat said. “Because the tax piece is aimed at revenue enhancement and if they wanted to get rid of it, they would eliminate cigarette consumption. Right? But they won’t go that route because that’s politically toxic. And so they’re playing this game and in the middle is the lower-income folks who are paying the preponderance of the tax.”
The state budget, once it’s eventually debated, amended, and approved, will be in place from July 1, 2020 to June 30, 2022.
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