Farmville Has No Choice But To Look For Revenue Streams
Published 2:39 pm Thursday, May 23, 2013
Few smokers will applaud if the Town of Farmville adopts a 27-cent tax on packs of cigarettes.
But they probably won't stop smoking, either.
And to the detriment of their health.
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The tax, included in the Town's proposed 2013-14 fiscal year budget, amounts to 1.35 cents per cigarette in a pack of 20, which is not an outrageous levy. If somebody wants something, regardless of what it is, they're unlikely to bat much of an eye if it costs one penny more than it previously did.
The Town feels impelled to seek additional revenue streams to provide public services to those who live, work, or visit in Farmville. Town Council's motivation is no whim. Costs are always on the rise and the General Assembly annually moves closer to tampering with, or erasing altogether, the Town of Farmville's second-largest revenue stream-the business license tax, or BPOL.
Farmville expects to receive $2.2 million from its meals tax next year, its largest source of local revenue, with the BPOL tax expected to produce $1.3 million. Other major sources of revenue for the Town include about $600,000 from the real estate tax, $340,000 in sanitation fees, and $215,000 in personal property tax revenue.
Were the General Assembly to wipe the BPOL tax off the books the severity of that consequence on the Town of Farmville's budget and ability to operate municipal departments cannot be overstated.
Town Council is therefore wise to diversify the Town's revenue portfolio.
The sanitation fee was adopted a year ago as part of Farmville's mutual fund approach. Water rates have risen and water and sewer tap fee increases are included in the proposed budget.
Nor is that all.
Recalling Benjamin Franklin's famous observation that “nothing is certain but death and taxes,” one wryly notes the confluence of that expression, in practical effect, in the Town's proposed increases in fees to dig new graves at Westview Cemetery, rate hikes also included in the proposed 2013-14 budget.
So smokers are not alone in being the object of the Town's desire to establish new and dependable streams, brooks or rivulets of revenue, especially if the state legislature is eventually going to dam the BPOL tax's river effect.
Town officials clearly want to avoid placing the entire financial burden on the real estate tax, which would have to be tripled to make up for the loss of business license tax revenue. Few people on fixed incomes would easily bear such an added weight on their real estate tax bills. And they should not be asked to do so.
The proposed cigarette tax shares an important similarity with the meals tax-much of the revenue it generates will come from people who live beyond Farmville's corporate limits. That characteristic means it will reduce the tax revenue burden on town residents. One can estimate, without exaggeration, that at least half of the cigarette tax's revenue will come from non-residents, given the number of people who come to Farmville each day to work, study, shop, and simply visit the area's attractions. From a town resident's point of view, that sure beats increasing their real estate tax.
Caught in the middle of the cigarette tax debate is the retail community, perhaps most notably convenience stores. The sale of cigarettes figures prominently in their business totals and their unease with the Town's cigarette tax proposal is understood. In their shoes we would all feel the exact same way. Their fear is that a significant percentage of cigarettes purchased in town now would, after a tax is created, forever after be purchased from stores located beyond the Town's corporate, and taxing, limits. That would also reduce tax revenue for the Town, contrary to the motivation behind the cigarette tax proposal.
The experience in some communities where a cigarette tax has been established suggests these fears are not misplaced. There are relatively few locations conveniently outside the Town of Farmville's limits, however, where cigarettes can be purchased. Unlike, for example, Lynchburg, where retail operations extend in profusion just outside the city's limits, making it easy to dodge that locality's cigarette tax. One hopes, should Town Council create the cigarette tax, that established consumer patterns would be maintained, given the retail geography here. The meals tax, it should be noted, has not hurt restaurants at all.
Again, the Town of Farmville must preserve its ability to provide services to the community, and those services require funding. A cigarette tax may not be perfect but it is a funding source still allowed by an increasingly intrusive state government.
A Town official remarked during this month's Town Council work session that a tariff on packs of cigarettes would be a voluntary tax because people do not have to smoke. The observation is, strictly speaking, accurate but when one factors in the addictive nature of nicotine, “voluntary” seems less truthfully precise. The Town, one may argue, would be taxing an addiction.
Other Towns tax the same addiction. Blackstone has a cigarette tax of 20 cents per pack. Even the Town of Scottsville taxes cigarettes, a dime per pack. Cigarettes are taxed in every corner of the commonwealth, up to as much as $1.12 for a pack of 30 cigarettes.
And the addiction persists. The stream of revenue is too reliable. Unfortunately so.
The Town of Farmville may or may not join the list of Virginia communities that generate revenue from those who cannot break free from nicotine. But if the Town does, and if it encourages someone to stop smoking, or to cut back on their smoking-or keeps a young person from beginning the nicotine habit-the tax's benefits would far exceed any monetary gain for the Town's treasury.
And that would be a very good thing, indeed.
More taxes, Mr. Franklin, but less death.