Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 3, 1992 TAG: 9202030135
SECTION: VIRGINIA PAGE: A-3 EDITION: METRO
SOURCE: ROB EURE STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
TAX INCREASE ON TOBACCO LOOKS LIKELY
Here where tobacco leaves adorn the ceiling of the House of Delegates chamber and the scent of cigarette manufacturing plants perfumes the early morning air, legislators seem poised to raise taxes on venerable "King Tobacco."A recessionary budget that has lawmakers scrambling for inoffensive taxes - combined with the loss of some longstanding clout in Virginia's tobacco fields - has boosted the chances for the first increase in tobacco taxes in more than 30 years.
"I don't see how we can really fight it," said Sen. Benjamin Lambert, D-Richmond. Lambert said he is advising tobacco interests - two of the city's leading employers are tobacco companies - to embrace the smallest increase they see "and call it a victory."
Lambert said he hopes for as little as a half-cent increase in the 2.5-cents-per-pack state cigarette tax; but more likely is a 3-cents-per-pack raise supported by Senate Majority Leader Hunter Andrews, D-Hampton.
Proposals to increase taxes on tobacco have been doomed to failure in the General Assembly for decades. In the Senate Finance Committee, which Andrews heads, such measures were summarily routed to the taxation subcommittee, a non-existent panel that served as a graveyard for unpopular tax bills. Its honorary chairman was Sen. Howard Anderson of Halifax, a senior Democrat from tobacco country.
In the House, Speaker A.L. Philpott, a pipe smoker from the Southside town of Bassett, kept tobacco taxes off the floor.
Philpott's death last fall and Anderson's retirement "changed the whole equation," said House Majority Leader Richard Cranwell, D-Vinton. "Now, it's not a question of if, but how much."
Another important factor was the decision by the North Carolina legislature last year to add 3 cents per pack to its tobacco tax, raising it to a nickel and leaving Virginia's tax the lowest in the nation.
"I think that's what has really turned the table," said Andrews, who is predicting a tobacco tax increase will pass. He backs a measure, sponsored by Sen. Edward Holland of Arlington, for a 3-cent increase that would raise $40 million in the two-year budget period.
For years, Virginia was the second-largest tobacco producer, behind North Carolina, and kept the cigarette tax just above that of its sister state. The Holland bill would maintain that tradition, raising the state tax to 5.5 cents. Andrews points out that Virginia has slipped to third in tobacco production now, behind Tennessee.
Virginia has had a tax on tobacco since 1960, when the levy was 3 cents per pack. In 1966, when the state instituted the sales tax, the levy on cigarettes was reduced to 2.5 cents.
Cranwell has proposed an increase of 7.5 cents per pack in a bill that gradually would phase out local tobacco taxes. Those levies range as high as Newport News' 25 cents per pack. Cranwell's measure would raise $99 million in the biennium.
Other legislators have suggested tax increases, ranging from Sen. Elliot Schewel, D-Lynchburg, who has a 20-cent increase proposal, to Del. Kenneth Plum, D-Fairfax, who has proposed a manufacturing tax on tobacco. That tax, set at less than 0.5 cents per pack, would raise $250 million.
Tobacco lobbyists still are fighting any increase, but some with less vigor than before. R.J. Reynolds executives have talked to Lambert about a higher tax; Philip Morris, the other Richmond manufacturer, is dead set against the tax.
And most Southside Virginia legislators remain steadfast in opposition to any tax on one of the state's first agricultural products.
"I'm against them unless the tobacco companies themselves and the Farm Bureau say they support it," said Del. Lewis Parker, D-South Hill.
Sen. Charles Hawkins, R-Chatham, acknowledged "there's a lot of pressure to pass some sort of tax on tobacco," but held out hope the old alliances might kill the tax one more time.
Some Southside legislators, however, are simply staying quiet. Sen. Virgil Goode, D-Rocky Mount, said he would wait to decide on the tobacco tax until it reaches the Finance Committee, on which he serves.
That's what leads Holland, who is carrying the tax for Andrews, to wink and smile when he's asked to assess the bill's chances.
"I'm getting the old golden silence," Holland said. "I'm not hearing much against it."