Concerns expressed over cigarette tax
The Town of South Hill opened the floor to the public at Friday’s hearing to discuss a proposed cigarette tax in town, and multiple business and property owners took the opportunity to express their concerns.
South Hill Town Manager Kim Callis announced the preliminary draft budget at April’s town council meeting noting multiple fund expenditure increases, one of which contains the creation of a new law enforcement officer retirement benefit to compete with other local police departments. To help cover the costs of enhancing LEO Benefits (Law Enforcement Officer Benefits), as well as communication system upgrades for the police department, a tax of $0.30 cents per pack of cigarettes, or $0.015 cents per cigarette, has been proposed.
This would constitute a new tax in town. While at the April town council meeting it was announced the tax would affect any individually wrapped tobacco product, including cigars and individually wrapped snuff and chew, Callis said Friday town staff now wants to focus only on cigarettes.
South Hill Police Chief Stuart Bowen was present at Friday’s hearing and explained that the police department needs to be upgraded. He said with an enhanced retirement plan and new communication system the department will benefit greatly. He said the main concern is the communication system and being able to utilize a mobile field reporting system. Bowen said with a new communication system, “Instead of hiring more officers the officers we have will be able to work better.”
Callis explained that the town only has control over four taxable areas: Real Estate, Personal Property, Meals/Lodging and Business/Professional/Occupational Licenses (BPOL). He said the town is limited on what it can use to bring in the revenue needed to cover the expenditure increases.
Callis shared the dates of the last tax increases on each category to demonstrate that tax increases are not the town’s first choice for raising revenues. The real estate tax has not increased since 2005, personal property tax has not increased since 2000, meals/lodging has not increased since 2008 and BPOL tax has not increased since 2000.
Many members of the public present at the hearing said they understood tax increases are necessary sometimes but were in agreement that the proposed cigarette tax is not the answer in this case.
Dale Cutler, owner of C&M Tobacco, was present with a petition signed by 650 people from in and out of town who are opposed to the cigarette tax. He said he has only had the petition out for the past two weeks and already has that many signees. He said his business and the town will suffer not only by a loss of in-town customers but also from losing out-of-town customers who come to South Hill to buy from his establishment and, while in town, may shop at other local businesses.
Willie Bob Smith, local business and property owner, also expressed concerns with customers moving outside of town to conduct business. He said customers that stop in town to get their cigarettes, gas and other products are going go move outside of South Hill to purchase not only their cigarettes but any other products they would usually purchase where they buy their cigarettes.
“A lot of people aren’t going to make it without cigarettes,” he said.
He said he does not smoke and is a landowner himself, yet he would rather see an increase on land and property taxes than a tax on cigarettes.
Justin Smith, local business and property owner, said he feels the cigarette tax would produce more revenue with less public concern if it were placed on meals/lodging. He said people can choose to go elsewhere to purchase cigarettes when they notice an increase but are not as likely to travel far due to a $0.10-cent increase on their meal from a restaurant.
Callis assured the public that he and his colleagues have spoken with other towns in the area that have implemented cigarette taxes and the other towns have not seen a major decrease in business. Despite this reassurance, multiple community members present expressed the opinion that a cigarette tax is a revenue-generation tool that is meant for a city, not a small town that thrives on local business.
Beth Callis, owner of Helping Hands Massage, was another to speak in opposition to the cigarette tax. She said her issue has nothing to do with the smoking or the cigarette aspect of the tax but with the overall issue of the local government trying to dictate personal choice. She said if taxes need to increase then the tax chosen needs to be broad and cover the majority of the town as opposed to targeting a specific group. She said the cigarette tax seems to be a temporary fix and that in the end the town is not going to have the increase in revenue that it is expecting.
After hearing the comments and questions, Kim Callis ended the meeting by thanking everyone for their input and letting the public know that their concerns will be discussed by the Budget and Finance Committee as well as the town council.
In the preliminary draft budget Callis presented at the April town council meeting, the proposed police department budget increases from $1.9 million to $2.5 million in the coming fiscal year.
Finance Director Katherine Ward said there are 25 retailers in town who sell cigarettes, and they would be responsible for buying stamps from the town and applying them or having their distributors apply them.
Callis said the town would have the stamps produced and printed and proposed the town incur the cost of giving retailers a one-time supply of stamps at the beginning.
“So that people will not be out of any out-of-pocket money up front, we are proposing to give them a supply of stamps at no cost to them, which we will incur that cost, so they can apply them to the cigarettes… and when they begin selling them and collecting the tax they will then have money in hand to come in and purchase additional stamps,” he said.
South Hill Police Department would be responsible for enforcing the cigarette tax, which Callis said is already being levied by 91 jurisdictions throughout Virginia.
Under questioning from council members, Callis said if the town does not implement the cigarette taxes it will have to raises revenues from elsewhere.
“If we didn’t get it from here, we’d have to look at some other taxes, and we really don’t want to touch that,” he said.