DATE: Friday, May 9, 1997                   TAG: 9705090674

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 

SOURCE: BY MATTHEW DOLAN, STAFF WRITER 

DATELINE: CHESAPEAKE                        LENGTH:   41 lines

BUSINESSES PROTEST AS CHESAPEAKE PONDERS A HIGHER CIGARETTE TAX

Raising Chesapeake's cigarette tax by 5 cents is a way for the city to raise a quick half-million and help plug a projected $19 million budget gap over the next two years.

But about a dozen local retailers cried foul Thursday night as they gathered at a local restaurant to plot strategy against the idea.

Rose Degan, who owns Brentwood Texaco on George Washington Highway near the Portsmouth line, said 90 percent of her nongasoline sales comes from cigarettes.

``People know that I sell the cheapest cigarettes around,'' Degan said, who runs the gas station with her husband, Lenny. ``And there are a lot of poor people in the neighborhood who won't come around if the price goes up 5 cents.''

City officials polled people in nine area cities and concluded that the average city cigarette tax is 24 cents a pack. If Chesapeake raised its tax from 20 to 25 cents, officials estimate that it will yield $540,664 in additional revenue.

But gas station and convenience store owners close to the Portsmouth and North Carolina borders fear that the regular customers will jump to cheaper retailers. With at least two council members at the gathering, retailers said they are trying to persuade the city to forgo the cigarette tax increase.

A petition, for which retailers and tobacco interests have gotten hundreds of signatures, pledges that the undersigned smokers will ``take our business elsewhere.''

George Baker, who owns Greenbrier Citgo, said he doesn't expect that the tax would hurt his business, but blasted the city for turning to tax increases when, he said, it should be reducing spending.

Raising property taxes - now at $1.26 per $100 of assessed value plus 2 cents extra for those in mosquito control districts - is not under consideration by the council, officials have said.

The City Council will hold a final work session at 4 p.m. Tuesday. The city has until Thursday to adopt a new budget. KEYWORDS: CIGARETTE TAX INCREASE

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