Virginia Township Levies Huge Cigarette Tax Increase

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Virginia Township Levies Huge Cigarette Tax Increase

MARION, Va. -- A tax increase on cigarettes has left some Marion, Va. merchants upset and claiming they were not notified of the change. Others who knew about the increase are just unhappy about it.

Last month, Marion's tax on cigarettes jumped from 2 cents to 12 cents per pack, or $1.20 per carton -- a 500 percent tax increase. The Town of Marion began notifying retailers of the increase in June by sending letters to the companies that buy cigarette tax stamps, but it didn't send letters to every business in town that sells cigarettes. Approximately 20 cigarette distributors received letters advising them of the tax increase. The distributors buy the stamps and apply them to the packages, then distribute them to sellers within the town limits.

However, some of the distributors broke the news to local business owners. Some did not.

One local convenience store retailer, who spoke anonymously about the issue, discovered she had lost almost $700 on July cigarette sales because she did not know about the tax increase. She said her distributors did not tell her about it, so she did not charge customers the higher price. Now she has to pay the extra tax out of pocket. She believes the town has a responsibility to tell the merchants individually.

Officials for the Town of Marion said they followed the legal requirements for making changes in the local tax rate. Any time the town considers changing tax or utility rates, it must schedule a public hearing for citizens to attend. Any citizen of the town may speak at the public hearing. To make sure citizens know about the hearing, the town must advertise two times with a week between the advertisements, preferably in a local general distribution newspaper, which it did June 7 and June 14.

The Smyth County News & Messenger included news about the proposed cigarette tax increase, along with other changes in the town's fiscal matters, in a story about the 2003-04 Town of Marion budget plan, published June 7. However, the cigarette tax news was not emphasized in the headline. A week before, Chilhowie had made top headlines with its proposal to increase cigarette tax from 2 cents to 10 cents per pack -- nearly the same proposal Marion was considering. As Chilhowie went through the proper legal steps for changing tax levies, citizens turned out to complain about the increase. Later, under pressure from citizens, Chilhowie cut the increase in half, taking its cigarette tax from 2 cents to 6 cents -- a 4-cent increase.

Now retailers say they are losing business to neighboring towns because of the price differential, and ultimately, the town will suffer. "When my cigarette wholesaler informed me [of the increase] I was shocked and completely taken by surprise," said Terry Hayden, of Hayden's World conveniece store. "It seems that the governing body of our poor little dying town of Marion has taken it upon themselves to somehow aid in its demise. As if business was not bad enough already, these highly intelligent individuals have decided that the tax on the sale of cigarettes in the town of Marion needed to be raised from twenty cents to $1.20 per carton. I personally think that the increase is a bit much."