This Is Why Farmville Needs A Cigarette Tax

Published 2:43 pm Tuesday, June 11, 2013

The Town of Farmville isn't blowing some smokescreen of imagined concern over its ability to sustain tax revenue as it considers implementing a cigarette tax of 27 cents per 20-cigarette pack.

Town council should vote to do so to meet current expenses and prepare for future funding needs. Adding this revenue stream is much fairer than increasing the real estate tax, which would particularly hurt the elderly on fixed incomes. And it will also generate tax revenue from people who live out of town and out of the area, reducing the overall tax burden on town residents already paying two real estate tax bills each year. They pay one levied by the Town and a second levied by Prince Edward County.

The tax revenue issue is real and is being grappled with by localities across the state as they watch the annual efforts by various legislators to abolish or alter the business license, or BPOL, tax, and the machinery and tools and merchant's capital taxes.

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“Efforts to weaken or completely dismantle local business taxes are not new in Virginia. Over the last 10 years, numerous legislative proposals have been introduced in the General Assembly to undermine three local business taxes,” the independent non-partisan Commonwealth Institute for Fiscal Analysis notes in a report issued this month, citing these three taxes eyed by the powers that be in Richmond.

But how many people in Richmond really care about the elderly living on fixed incomes in Farmville? And so many of those politicians follow the dictates of lobbyists who donate to their election campaigns and have no grip on life in Farmville.

People have a choice about buying a pack of cigarettes. They can buy a pack or not buy a pack and at the end of the day they still have a place to live. No such choice exists when it comes to the need of an elderly resident living on a fixed income to continue being able to afford to live in their home. The revenue generated by a cigarette tax is money that won't have to be added to the real estate tax or the water and sewer bills, where increases also make it difficult to live on a fixed income.

There are 171 cities, towns and counties in Virginia and just two of them do not collect at least one of the three taxes, the Institute states, citing a survey by the state's auditor; 130 of them collect the BPOL tax, which is Farmville's second largest source of revenue, expected to generate $1.3 million this year. Only the meals tax, with $2.2 million, provides more revenue to the Town.

“If the state were to eliminate these local taxes, ways to make up for lost revenue are limited,” the Institute's report, written by Sookyung Oh, Sara Okos and Michael J. Cassidy, emphatically declares.

Which is why Town Council has proposed the cigarette tax to help create another revenue stream to pay for services, such as law enforcement, needed by the community, a community that includes people struggling to pay their monthly housing bills. And it's not just elderly residents living on what amounts to a fixed income who would suffer if the real estate tax or water bill, expenses they have no choice but to accept, were raised, instead.

Cassidy, the Institute's president and CEO, stresses in a press release announcing the report that “local governments are really hamstrung by the legislature in Richmond when it comes to raising replacement revenue if these taxes were to be eliminated.”

That is the reason the Town of Farmville is looking to a cigarette tax, rather than piling onto the real estate tax.

The Institute's report concludes that Virginia's local governments “understand the needs of their own community best. While there may be better ways to raise revenue at the local level, eliminating local business taxes without the right replacement mechanisms threatens the ability of cities, towns and counties to raise enough resources to pay for local priorities. In the absence of real alternatives from Richmond, simply eliminating these locally-controlled revenue sources just passes the buck.”

The powers that be in Richmond have no genuine understanding of Farmville's needs and the daily challenges of providing municipal services to the people who call Farmville home. But that doesn't stop some of them from sticking their nose in Farmville's business.

Both the Republican and Democratic candidates for governor are running with plans that target the BPOL tax. Farmville's Town Council is not reprising the role of Chicken Little. The revenue sky is not falling now but there is and will continue to be a focused effort to pull it down. The wolf is howling; it's not the sound of the wind finding cracks in the windowpane.

So the Farmvilles of Virginia have no choice but to take a proactive approach to find ways to fund services for the citizens they serve, and do so as fairly as possible, as fairly as state law allows. The cigarette tax is one of those alternatives still allowed to towns by the state.

The cigarette tax will not unfairly target one group of people, any more than the real estate unfairly targets owners of real estate, or the personal property tax unfairly targets owners of motor vehicles, or the meals tax unfairly targets those who eat at restaurants. What Town tax includes everyone?

Local government must raise revenue needed for the provision of services to the community and should do so as fairly as possible by not putting the entire tax burden on one group of people. The cigarette tax will simply be one tax tool in the revenue toolbox.

Town Council, whose members live and give their lives to Farmville, should vote to use it, regardless of how people in Richmond feel about it.