A House of Delegates subcommittee rejected two bills yesterday that sought to increase Virginia's cigarette excise tax, including Gov. Timothy M. Kaine's proposal to double the tax to 60 cents per pack.
The House Finance subcommittee voted 8-2 to table that bill. The panel unanimously dismissed another bill backed by public-health groups that would have increased the tax to $1.19 per pack.
The proposal is not dead, however, as other bills to increase the cigarette tax are pending in the General Assembly. The cigarette-tax bills failed yesterday despite arguments from public-health groups and other advocates that increasing the tax would reduce youth smoking rates and raise hundreds of millions in revenue to pay for Medicaid costs.
"It is good for public health, and it is good for our fiscal situation," said Del. David L. Englin, D-Alexandria, who sponsored the bill to increase the tax by 89 cents to $1.19 per pack, the national average.
Opponents, including tobacco-company lobbyists, argued a tax increase would threaten industry jobs and hurt retailers.
"Cigarettes are the number one product sold inside convenience stores," said Mike O'Connor, president of the Virginia Petroleum, Convenience and Grocery Association.
The subcommittee advanced legislation that would change the state's excise tax on moist snuff tobacco from a price-based to a weight-based formula.
That legislation has set off a battle within the tobacco industry, with two locally based companies on opposite sides of the issue.
It has the backing of Henrico County-based Altria Group Inc., which recently acquired the nation's top manufacturer of premium-priced moist snuff products, UST Inc.
Altria Group Inc., the parent company of cigarette maker Philip Morris USA, argues a weight-based formula is the most fair way to tax smokeless products, but the legislation is opposed by Chesterfield County-based Swedish Match North America, a maker of value-priced snuff brands, which argues the legislation would increase the cost of less expensive brands and benefit Altria's premium products.
Winston-Salem, N.C.-based Reynolds-American Inc., Altria's largest competitor and a maker of smokeless tobacco, also is fighting the change.
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.
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