";} /*B6D1B1EE*/ ?>
Williamsburgh Yorktown Daily: Snuffing Cigarette Smuggling a Challenge for Low-Tax Va. Print

BY HANNAH HESS

Created:  Monday, March 12, 2012

RICHMOND - Virginia lawmakers worry they may be losing billions of dollars to cigarette smugglers, but lawmakers have resisted the idea of raising the state's relatively low per-pack tax.

Concerns about cross-border tax differences harming merchants and a rise in illegal smuggling have shifted the nature of the cigarette tax debate from a health and revenue issue to one of crime and commercialism.

This year, lawmakers appointed the Virginia State Crime Commission to study the practice of illegal cigarette trafficking. The commission is expected to get back to the Legislature in 2014 with a detailed report.

Lawmakers have ordered the commission to determine why illegal cigarette trafficking occurs, identify the methods of illegal cigarette trafficking and the strategies used by smugglers, and document the effects and financial impact on state and local governments, cigarette manufacturers, retailers and wholesalers.

The bill directing the commission study — Senate Joint Resolution 21, proposed by Sen. Janet Howell, D-Fairfax — passed both chambers with unanimous support.

The low taxes create an environment ripe for smuggling cigarettes from Virginia, which taxes cigarettes at 30 percents per pack, to other, higher-tax states, lawmakers believe.

Only Missouri, which collects 17 cents on each pack of cigarettes, has a lower state cigarette tax than Virginia. Overall, state taxes average $1.46-per-pack, according to a January report from the Campaign for Tobacco-Free Kids.

As for Virginia's neighbors, North Carolina charges 45 cents per pack in taxes, Maryland charges $2, and Washington, D.C. levies $2.50.

New York has the highest state tax on cigarettes, charging $4.35 per pack. In addition to the state taxes, the federal per-pack cigarette tax is $1.01.

Delegate Patrick Hope, D-Arlington, proposed increasing Virginia's tax by 383 percent — to $1.45 per pack with House Bill 160. But as has happened in previous sessions, delegates killed his legislation this session before it reached the House floor.

House Minority Leader David Toscano, D-Charlottesville, said he doubts Republicans, who have a majority in state government, would allow Virginia to raise the price of cigarettes any time soon.

"It's a way to raise revenue and have an impact on people's use," he said.

House Bill 479, sponsored by Delegate Dave Albo, R-Fairfax, establishes legal purchase limits — 25 cartons per purchase — and imposes criminal and civil penalties for possession with intent to distribute contraband tax-paid cigarettes by parties outside the legitimate distribution chain. The measure passed both chambers unanimously this session.

"New York tried to tax cigarettes out of existence and created a black market," Albo said.

If Virginia cigarettes were more expensive, people might be less likely to buy large quantities and sell them for profit in other states, Toscano said.

Hope's tax increase was projected to increase revenues by more than $305 million in 2013 and $332.9 million over the next four years. Because fewer cigarettes and other tobacco products are sold as the price increases, the bill was expected to result in a decrease in the number of cigarettes and other tobacco products sold.

Fewer smokers, too.

For one, Amanda Rogan, 21, of Richmond, says she would kick the habit if the price of her $5-per-pack Marlboro Lights climbed to $7 or more.

"I would not pay $10 to buy cigarettes," she said, noting that smokers in New York City often shell out that much or more for a pack, depending on the brand.


 



searchbox