A Taxing Issue

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A Taxing Issue

RICHMOND, Va. -- Yes, Virginia, there are cigarette taxes.

With 18 states having already approved cigarette tax increases in 2002, the pressure could be mounting for a hike in Virginia, home of the nation's lowest state cigarette tax and home to the tobacco manufacturing giant Phillip Morris.

A recent poll shows Virginians strongly support a 60-cent tax increase on packs of cigarettes, according to Crosswalk News.

Many of the states that have raised cigarette taxes this year have done so in order to pay for budget shortfalls. But Virginia hasn't touched its cigarette tax since 1960.A bill was introduced in Virginia last year to boost the state's tax to 50 cents per pack, but it received little support. That measure, or the one suggested in the poll, would raise between $320 million and $370 million for the state, according to estimates.

A bill to raise the tax in Virginia would face several hurdles in the Legislature, as well as opposition from Philip Morris, which is headquartered in Richmond, the state capital. Philip Morris employs 6,300 people in Virginia and in 2000 contributed $1.7 billion to the state economy, spokesman Tom Ryan said.

While the temptation is great for state lawmakers to use cigarette taxes to solve their fiscal problems, such measures also unfairly penalize smokers, Ryan said.

"Many people don't take into account the unintended consequences of excise taxes," Ryan told Crosswalk News. "They have a much greater impact on those who are unable to afford them. In 1999, people with incomes under $30,000 per year paid 53 percent of tobacco taxes.

Ryan added that such taxes also have adverse affects on retailers and lead to smuggling of cigarettes between states.

A spokesman for R.J. Reynolds said increasing taxes often brings in money for short-term uses, but can drain the state's economy over time. "If cigarette sales go down as a result of the tax, the state's economy can be hurt," spokesman John Singleton told Crosswalk. "You can have a situation where the state's economy can be dramatically impacted when [tobacco] is a major part of the economy, as it is in Virginia."