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Posted on 08/19/2002 4:06:23 AM PDT by kattracks

(CNSNews.com) - With 18 states having already approved cigarette tax increases in 2002, the pressure could be mounting for a hike in Virginia, home of the nation's lowest state cigarette tax and home to the tobacco manufacturing giant Phillip Morris.

A new Mason-Dixon poll, which will be released this week by a coalition of public health groups, suggests Virginians strongly support a 60-cent tax increase on packs of cigarettes.

The poll comes at a time when the state is facing a mounting budget deficit. Democratic Gov. Mark Warner will discuss several options to avert a fiscal crisis when he meets with the Legislature Monday.

Many of the states that have raised cigarette taxes this year have done so in order to pay for budget shortfalls. But Virginia hasn't touched its cigarette tax since 1960.

Warner spokeswoman Ellen Qualls said the governor would not propose a cigarette tax hike at the meeting, but given the state of the budget, "He does not think it should be taken off the table."

"It's a potential option to deal with the imbalance between our revenue and the expectations and obligations of state government," Qualls added.

A bill was introduced in Virginia last year to boost the state's tax to 50 cents per pack, but it received little support. That measure, or the one suggested in the poll, would raise between $320 million and $370 million for the state, according to estimates.

State cigarette taxes in Virginia raised between $15.1 million and $16.7 million in 2001, according to statistics from the Campaign for Tobacco-Free Kids and R.J. Reynolds Tobacco Co. Those numbers do not take into account the money raised by county taxes, which R.J. Reynolds estimated at $33.6 million.

"We know Virginia is facing a budget deficit and we feel the timing is right ... even in a state like Virginia, which is not so dominated by tobacco interests as it was," said Pete Fisher, assistant director of advocacy for the Campaign for Tobacco-Free Kids. Fisher's organization commissioned the poll along with the American Lung Association, American Cancer Society and American Heart Association.

Fisher said tax increases in other states have reduced consumption of tobacco and raised millions of dollars in additional revenue.

"We know a lot of smokers want to quit and will quit when the tax goes up," he said.

A bill to raise the tax in Virginia would face several hurdles in the Legislature, as well as opposition from Philip Morris, which is headquartered in Richmond, the state capital.

Philip Morris employs 6,300 people in Virginia and in 2000 contributed $1.7 billion to the state economy, spokesman Tom Ryan said.

While the temptation is great for state lawmakers to use cigarette taxes to solve their fiscal problems, such measures also unfairly penalize smokers, Ryan said.

"Many people don't take into account the unintended consequences of excise taxes," Ryan said. "They have a much greater impact on those who are unable to afford them. In 1999, people with incomes under $30,000 per year paid 53 percent of tobacco taxes.

"You're asking a small portion of the population to pay a disproportionate share of the budget deficit," he said. Ryan added that such taxes also have adverse affects on retailers and lead to smuggling of cigarettes between states.

A spokesman for R.J. Reynolds, a Philip Morris competitor, said increasing taxes often brings in money for short-term uses, but can drain the state's economy over time.

"If cigarette sales go down as a result of the tax, the state's economy can be hurt," spokesman John Singleton said. "You can have a situation where the state's economy can be dramatically impacted when [tobacco] is a major part of the economy, as it is in Virginia."

The American Lung Association reports that more states have raised taxes this year than in any year since 1969. The organization also reports that the money is not being used for educational programs in most states.

This issue has also found its way into Maryland's gubernatorial campaign, in which Democratic Lt. Gov. Kathleen Kennedy Townsend is opposed by Republican U.S. Rep. Bob Ehrlich.

Townsend, whose double-digit lead in the polls has vanished in recent weeks, earlier this month proposed a 36-cent increase in the state's cigarette tax to pay for new health-care initiatives. The proposal would not take effect until the second year of her term, but it comes after Maryland already raised cigarette taxes from 66 cents to $1 this year to pay for school aid.

"The funding would not go to fill holes in our budget," Townsend campaign spokeswoman Kate Philips said. "It's a discretionary tax - if you don't want to pay the tax, then don't smoke."

Singleton countered that viewpoint and said it is simply unfair to ask smokers to shoulder a heavier burden of taxes.

"States are looking for a relatively speedy and quick way to fill their budget deficits and adult smokers seem to be singled out," he said.

E-mail a news tip to Robert B. Bluey.

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