Going Up In Smoke
Published 2:40 pm Thursday, December 26, 2013
FARMVILLE — Town council’s revenue hope for a cigarette tax wasn’t just a pipe dream.
The Town wasn’t simply blowing smoke.
The 27-cent tax on a pack of 20 cigarettes generated $109,060 through the end of November.
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“And we budgeted $150,000 for the year,” town manager Gerald Spates told council members.
The cigarette tax is lighting up the Town’s coffers and at its current pace will easily outstrip the 2013-14 fiscal year revenue projection included in the Town’s budget.
“My prediction is over $300,000,” council member David E. Whitus prophesied, “and I think we’ll do it.”
Town council adopted the cigarette tax in June in a 5-2 vote, over the protests of retailers who said the tax would drive cigarette sales out of town.
The cigarette tax is the result of the Town’s concern over the future of the Business Professional and Occupational License (BPOL) tax, its second largest revenue source, and town council’s search for alternative revenue streams.
The Town of Farmville’s largest source of revenue is its meals tax.
The General Assembly annually considers legislation to do away with the BPOL tax, based on gross receipts, or modify it some way, perhaps basing it on net receipts.
The cigarette tax took effect October 1, though revenue began coming in earlier—$7,500 in September—as wholesalers began preparing to meet the new tax requirements.
Wholesalers place the tax tags or decals, sold to them by the Town, on the packs of cigarettes they, in turn, sell to retailers. Every pack of cigarettes sold in the Town of Farmville must have the tax decal.
The cigarette tax had been recommended by council’s budget committee, which was surprised to learn how many towns have a cigarette tax.
The Town of Blackstone has a cigarette tax of 20 cents per pack and Scottsville’s is a dime.
When council members wondered last spring how much revenue a cigarette tax might produce, Spates pointed to Ashland and its 19-cent per pack tax and said Ashland officials told him they “take in over $200,000 a year.”
Blackstone, he added, generates approximately $150,000 per year from its tax.
Across the commonwealth, cigarette taxes are as high as the 75-cent per pack rate charged in the Town of Vienna and the 65 cents the Town of Purcellville charges.