Trade group pushes repeal of Beach cigarette tax hike

VIRGINIA BEACH

A national trade group has huffed and puffed for city leaders to reconsider the cigarette tax increase that went into effect this week.

The National Association of Tobacco Outlets sent a letter to City Council members asking them to revisit the tax. Councilman Bill DeSteph said "chances are" he would push the issue.

The increase, which started Tuesday, increased the per-pack tax on cigarettes to 61 cents from 50 cents, a 22 percent rise.

Thomas Briant, the trade association's executive director, said the city's decision to repeal a tax increase on machinery and tools - after Stihl Inc. and other manufacturers complained about that 90 percent increase - means the city should listen to tobacco outlets, too.

He said taxes on cigarettes become regressive and can cause budget shortfalls when smokers buy elsewhere. The group sent a letter this week to legislators in all 50 states saying continued increase on cigarette taxes are "killing the goose that lays the golden eggs."

"We're trying to forewarn the City Council," said Briant, whose office is in Minnesota. "Reconsider this or you will find yourself in a deficit situation you will have to correct."

DeSteph said he is concerned that manufacturers and tobacco outlets say they had no forewarning of the tax increases on their industries.

City Manager Jim Spore has said the city complied with public notification laws, but Briant questioned why the city didn't go beyond the law's minimum requirements.

"Before you increase a tax, wouldn't you want to talk to them?" DeSteph asked. "I would think you would."

Councilman Jim Wood said businesses have the burden of understanding the economy around them. Wood didn't hear complaints before the tax increase and noted that no one has spoken against it in front of the council, even now.

"If you're going to be in business," Wood said, "you have to stay on top of what the locality is theoretically going to do to your business and speak out publicly."

Max Weiner, a local smoke shop owner, said he couldn't get to this week's meeting because he was sick, but he said the council should be fair about how tax increases are levied.

"It seems everybody goes after the cigarette industry," Weiner said. "It's just crazy."

The tax increase leaves Virginia Beach with the second-highest rate in the region.

Norfolk taxes each pack of cigarettes at 65 cents. Portsmouth, Chesapeake and Suffolk all tax packs at 50 cents.

In Virginia Beach, the cigarette tax is designed to raise $13.2 million this budget year. The increase would provide $2.4 million, money that would fund projects in the city's strategic growth areas.

DeSteph said the city should communicate more directly with people and businesses who pay taxes to avoid these kinds of conflicts.

"There's a better way to do business," he said. "We just have to figure out what it is."

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