The other day I wrote about a plan to introduce a local excise tax on tobacco in the city of Danville. Yes. Danville, VA. A city with a tobacco heritage like no other, now wishes to tax its own mother, tobacco. Ironically it would be more equitable to tax towels, the other product which brought Danville to the world’s stage.
Excise taxes have their place I suppose, but I’m not going to work up a sweat trying to defend them. I’m a firm believer in equality. If a pair of Wranglers bought at Wal-Mart are taxed at one rate, how do you justify taxing a pack of Marlboro bought at Mom and Pop’s convenience store at a substantially higher rate? Especially a rate that returns to the locality the same amount or more than Mom and Pop earns on that product.
Keep in mind the tobacco tax is not earmarked for health care.
I attended the City Council meeting the evening of May 15th. This was only the first reading, so many of the City Council members could be excused for not knowing much detail. Or maybe not. This is the third time city manager Joe King’s grand idea has been presented in Danville. Councilman Adam Tomer remarked at one time he felt he was in the movie Groundhog Day.
Vice Mayor David Luther, recently defeated in his re-election bid, was either way off his game or completely clueless. At one point even claiming that point-of-sale signage could be found “on the ice cream box” in convenience stores. This was after the public comments so no one could dispute him. I’ll do so now. Sorry Vice Mayor. Can’t happen. Tobacco retailers can’t even place point of sale materials on their counter. All cigarettes must be stored and dispensed from behind the counter. Just like the stuff you buy to stock a meth lab.
Dr. Miller, another councilman and a heart doctor, kept wanting to make it a health issue, even after stating that $3 would not cause his patients to quit. And several times he mentioned having to fill your gas tank after the very short trip into Caswell County NC. Dr. Miller, I know smokers. I was one once. You don’t have to fill up every time you buy a pack.
Most shocking to all attending was the fact that City Manager Joe King and his Deputy had no idea what revenue could be expected from this new law. They could not even say, and back it up with hard math, that it would increase revenue at all. Last month godanriver.com had this;
King said his proposed 30-cent tax on a pack of cigarettes will bring the city $250,000-$300,000 a year in revenue.
Councilman Fred Shanks questioned how King arrived at that figure, asking what the tax would do to cigarette sales.
King said he could only go by what 31 of Virginia’s 39 cities that have a cigarette tax report, but admitted there is a risk of losing sales.
A month later and he was still just as uncertain. His deputy, who apparently did the research, stated that many cities have had the tax in place for some time, so there was no way to go back and see if it has enhanced revenue or not.
Not all of Virginia’s cities tax at the same rate, so I don’t know how you would compare the apple of Williamsburg to the orange of Danville.
Perhaps Danville’s City Council should reject this idea, just like they have twice before. Follow Adam Tomer’s and others lead from last year,
Councilman Adam Adam [sic] Tomer asked Danville City Manager Joe King if the budget could be balanced without new taxes, and King confirmed that was so.
“Then these three taxes (property tax, cigarette tax and meals tax) should die tonight, and balance the budget without them,” Tomer said.
Councilman Alonzo Jones noted that it is obvious what citizens want, and he wants no increases.
Councilman Buddy Rawley said this year can be balanced without an increase.
All of the small business representatives who spoke made it clear they are not defending smoking. They are only asking the City of Danville to support small business. Several mentioned the very real possibility of having to close stores and move a few miles down the road.
Mary Martin, representing PAMCO which owns Tarheel Tobacco, stated that her company had already made the decision. This tax passes and it’s off to somewhere more small business friendly.
John Marklin who, with a partner, owns the Sav-A-Lot store on Piney Forest Road, foresees “laborious and cumbersome” administrative costs with such a tax. His store just started selling cigarettes last week and he says he’ll look more carefully for future store locations.
Blue Ridge Tobacco’s Frank Armstrong hinted darkly that the lease on his in-city location was near its expiration date. He also stated it would greatly impact his company’s plans for future stores in the city.
I ask one question of any councilman who is undecided. If the tax does come to pass and several of these larger retailers close or move, what does that do to the already tenuous revenue forecast from your crackerjack city manager?
My opinion? This is an opinion piece after all. I would recommend a vote against it. Virginia Beach is large enough that a run to the border makes price chasing impractical, I still don’t like it but it probably won’t impact Mom and Pop convenience stores much. In NOVA, where a run for the border might mean a run across several borders, same thing. Every city needs to grow financially. But they need to balance the burden equally. Danville is small enough geographically to make this tax easy to escape from. No city should place such a burden on the smallest of its small business citizens.
Finally. Those of you who have read me for any time know I’m a long time admirer of O.Henry, the master of irony. His ghost was apparently in the room when the agenda for this meeting was composed. The second item on the agenda, under the heading of OLD BUSINESS was this;
Ordinance Amending the Fiscal Year 2012 Budget Appropriation Ordinance by Increasing Revenue from Japan Tobacco International US LLC (JTI) in the amount of $400,000 for the Design and Construction of a Fountain at the Entrance of the River District and Appropriating the Same.
FINAL ADOPTION
Passed unanimously.
Yep. They graciously accepted a $400,000 gift from tobacco, and the very next item on the agenda was this one, taxing tobacco. JTI, better put some ice on that.
NOTE: Nothing in this piece is to be construed as promoting tobacco use. If you don’t smoke now. don’t start. If you do smoke now, quit.
