Since
revenues and taxes are on just about everyone’s minds these days, new ideas are always welcome. Here at Bacon’s Rebellion, all kinds of strategies have been pushed, including some rather complex ones such as a per-mile gas tax.
Why not consider the most obvious tax of all — tobacco. Anti-smoking lobby the Campaign for Tobacco Free Kids is using the revenue crisis in the U.S. and among the states, including Virginia, as a vehicle to push a buck a pack increase for federal and state cigarette taxes.
Doing so would raise $9.1 billion for the federal budget. In Virginia, it could add $317.7 million to the state which faces a two-year deficit of $4.2 billion, Tobacco Free Kids says. It could help 65,1000 children choose not to smoke, help 34,100 adults to quit and help prevent 29,800 premature deaths, the Campaign says. Some $1.4 billion in health care costs could be saved — no small amount in a crisis-charged health reform climate.
According to Bloomberg, Virginia already has the 49th lowest taxes per pack — 30 cents. The state average is $1.34 a pack.
But the Old Dominion loves its leaf and Philip Morris USA and parent firm Altria, wield a lot of clout especially since their headquarters vamoosed from New York City to Richmond a few years back. Besides its new HQ in the old Reynolds Metals building in Henrico County, Philip Morris USA’s last remaining cigarette production facility is just south of downtown Richmond where it employs about 6,000. PM USA has closed other facilities in Louisville and Cabarrus County, N.C.
The tobacco giant is a major contributor both to Virginia political campaign coffers and to numerous charities, which have suffered a great deal in the recession. Tobacco, however, is pretty much recession proof. In 2009, during the worst recession since the Great Depression, Altria saw sales rise 21.7 percent to $23.5 billion. Net earnings were $3.2 billion. These healthy figures come despite the fact that the number of American smokers is declining, thanks to health concerns.
So, if the General Assembly and Gov. Bob McDonnell are really serious about dealing with the state’s budget crisis, maybe they should take a serious look at this obvious new source of revenue. But will they, given Altria’s clout?
Not that long ago, the answer would have been a flat “no.” But the state has recently taken a more sensible and modern approach. During the Gov. Tim Kaine administration, the legislature actually passed a law banning smoking in most restaurants.
Such limits do work. Take me. When I was a high school kid in the 1960s, cigarettes were so accepted that my high school had cigarette machines. I started smoking, Marlboros no less, when I was about 16. I stopped in my early 30s until I was posted as a journalist in Moscow. The intensity of that assignment, plus the presence of so many smokers, encouraged me to take up the habit again. The only reason I stopped was that my next post was in a Manhattan skyscraper way up 39 floors. New York City rules forbade workplace smoking, so if I wanted a smoke, I’d have to go down two banks of elevators to the street. Too much hassle. I quit.
Of course Philip Morris USA is going to be against any new tax hikes, saying they’ve just been through one. But the firm is always trying to have it both ways. Its Web site urges viewers not to use its products. Yet it keeps making them. It wants regulation by the Food and Drug Administration while its competitors don’t. By getting FDA oversight, Philip Morris would be pretty much locked into its leading market positions.
PM may be willing to play these logic games. But if the General Assembly wants to get taxes and improve the public’s health, cigarette taxes might make sense. They make more sense than McDonnell’s ideas of burdening North Carolinians with extra tolls on Interstates 85 and 95 if they want to drive north into Virginia or banking on offshore oil royalties from largely unexplored fields that won’t be available, if they exist, for about another decade.
Peter Galuszka