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Action on Smoking and Health
A National Legal-Action Antismoking Organization Entirely Supported by Tax-Deductible Contributions
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VA Raises Cigarette Tax 32.5 Cents; Gives Phillip Morris Tax Break [02/23-2]
Excerpts from:
Va. Tobacco Tax Break Advances
Senate Would Aid Philip Morris but Raise Cigarette Levy
By Jo Becker and Chris L. Jenkins Washington Post [02/21/04]
TThe Virginia Senate passed a multimillion-dollar tax break for Philip Morris on Friday, even as lawmakers voted to increase the cigarette tax for the first time in decades as part of a larger effort to help balance the budget.
Opponents said that, given the state's fiscal problems, the tax break was an untimely handout that rewarded the makers of a dangerous and unhealthy product.
Sen. Yvonne B. Miller (D-Norfolk) called the legislation a brazen "kickback" to reward the company for locating its headquarters in Richmond.
"We're talking about a company that sells an unhealthy product," she said. "Our values are twisted. It's crazy."
Philip Morris, alone among the large tobacco companies, has been willing to consider a cigarette tax increase, so long as it is not "excessive" and does not give county governments the option of adding their own cigarette tax increases on top of the state's.
Philip Morris has a powerful lobbying team in the Capitol and has contributed at least $1.6 million to state campaigns over the last five election cycles, more than any other tobacco company.
The company made the tax break a priority this year. Lawmakers looking for Philip Morris's support on a cigarette tax increase that would be passed on to smokers began considering the corporate break as a way to fend off company opposition.
Warner, who has proposed increasing the state's cigarette tax from a lowest-in-the-nation 2.5 cents to 25 cents a pack, said he would take a look at the tax break.
By a vote of 26 to 12 Friday, the Senate passed legislation that would increase the cigarette tax to 20 cents a pack in July and then to 35 cents in mid-2005. The Senate dropped a proposal by Warner that would have given counties the option of tacking on an additional 50 cents a pack. The local option was strongly opposed by Philip Morris.
Although the House did not vote to increase the cigarette tax or give Philip Morris a tax break, Speaker William J. Howell (R-Stafford) said this week that he would continue to remain open to a modest state increase. Both issues would have to be resolved during the coming budget negotiations between the House and the Senate.
Philip Morris's competitors were working to ensure that they, too, would get a tax break if the House passes its own version of the Senate measure. Philip Morris said the cigarette tax and the tax break were unrelated.
"Philip Morris U.S.A. supports the passage of the export tax credit bill because this credit will help domestic manufacturers, including, obviously, Philip Morris U.S.A., be competitive on the global level," said company spokesman Jamie Drogin.
Anti-smoking activists expressed concern about what they called the contradictory moves made by the Senate.
"We're acknowledging that this is a harmful product by passing the tax on cigarettes" to discourage their use, said Donna Reynolds, spokeswoman for the American Lung Association of Virginia, "but then we look the other way when it comes to giving a tax break for exporting that same product."
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