Where there's smoke, there's anger at Beach cigarette tax

VIRGINIA BEACH

Max Weiner is mad, smoking mad.

The owner of Papa Joe's Smoke Shop near Lynnhaven Mall is upset about city leaders raising the per-pack cigarette tax 22 percent, to 61 cents from 50 cents. The increase was included in the city budget approved last month, but that particular levy got little public attention.

Now that retailers know about it, they're not pleased. The National Association of Tobacco Outlets even weighed in, questioning how the city could raise the tax without directly informing affected businesses.

Weiner said he found out only after he got a letter telling him the new tax rate. The trade group has not said whether it would take any formal action to protest the increase.

City Manager Jim Spore, in a response to the association, said the city publicized the increase in line with the law.

Still, Weiner said he'd like the Beach to reconsider the increase, as it did with the recently repealed machinery and tools tax increase. That levy also was adopted last month, but council members rolled it back after Stihl Inc. and the Virginia Manufacturers Association complained.

"They reversed the tax for them," Weiner said. "That's crazy. Why are they doing it for them and not for us?"

Weiner said raising the tax will only drive smokers elsewhere to buy cigarettes, including North Carolina, which has lower tax rates.

In South Hampton Roads, Portsmouth, Chesapeake and Suffolk all tax packs at 50 cents. Norfolk has the region's highest tax, at 65 cents.

Several Virginia Beach council members said they doubted that the increase in the cigarette tax - which overall will raise $13.2 million in fiscal 2009 - would be repealed.

Spore has said the money generated by the increase, about $2.4 million, will finance projects in the city's strategic growth areas.

Councilman Harry Diezel said the tax is politically popular, especially because smoking is a public health issue. He noted the unsuccessful push to ban smoking in restaurants and bars.

Diezel said he is sensitive to criticism from Weiner and others who question why one tax increase is repealed and another isn't.

Councilman Bob Dyer said the machinery and tools tax increase is different because it could have threatened future expansions of Stihl, the city's largest manufacturer.

"Obviously perception is sometimes 100 percent of reality," Diezel said. "But in this particular case, I think we just have to weather that particular storm."

The cigarette tax affects about 30 accounts, according to city records. Some are distributors who provide cigarettes to dozens of convenience stores, supermarkets and other shops.

Kevin Barney, an executive vice president with Atlantic Dominion Distributors, said he pays $2 million a year in cigarette taxes to the Beach. He's doubtful, though, that any complaints will move Beach leaders to reconsider.

"They have their budget," Barney said. "I don't know how much they would listen to us."

Richard Quinn, (757) 222-5119, richard.quinn@pilotonline.com