Congressman smokin’ over proposed tax hike

By Allison Brophy Champion

Published: December 18, 2008

Congressman Eric Cantor, R-Richmond, slammed Virginia Gov. Tim Kaine’s recent proposal to increase the cigarette tax, calling it “an assault on jobs in Virginia, plain and simple … and an attack on our economy.”

But the governor says further taxing cigarettes only helps to pay for the extra health costs associated with the habit and could actually encourage smokers to quit.

In a statement Tuesday, Cantor tied the governor’s proposed 30 cent per pack hike to the potential for lost jobs in Virginia’s tobacco industry.

“At a time like this, when families all over Virginia are struggling to make ends meet, the last thing Virginians need is more job losses and more tax increases,” he said.

Kaine proposed the single tax increase as part of a larger plan to address the state’s expected $2.9 billion budget shortfall.

But Cantor felt the tax escalation would negatively impact jobs at Richmond-based Philip Morris and its parent company, Altria.

“This is more about subsidizing government waste at the expenses of jobs in Virginia than needed revenue,” he said.

The commonwealth ranked in the top five for spending growth by state in the last decade, Cantor said, citing the National Association of State Budget Officers. He went on to list the impact the tobacco industry, specially Philip Morris, has on the Virginia economy, saying Altria employs more than 10,500 people, including 5,500 in-state.

In addition, the company gave more than $11 million this year to various Virginia nonprofits.

Kaine defended his cigarette tax proposal in a nine-page release Wednesday.

He tied the tax on cigarette users to avoiding “even deeper cuts to our lean Medicaid program.” Adding 30 cents tax per pack would “bring tobacco products closer to paying for the costs that they create for Virginia taxpayers.”

Kaine continued, “The Centers for Disease Control and Prevention estimate that cigarette smoking causes more than $400 million per year in Medicaid expenses for Virginia.” His tax proposal would generate $167 million.

“In other words, Virginians have to pay another $233 million a year in taxes just to support Medicaid costs related to smoking. I believe that the taxes on smoking should pay for the budget costs incurred because of smoking,” Kaine said.

“And it may, in fact, reduce our health care costs by encouraging some smokers to quit,” he said. “That, in and of itself, would be a very good thing.”

If approved, the new tax would bring the per-pack tax to 60 cents, which the governor said would put Virginia at about half the national average.

Champion can be reached at 825-0771 ext. 101 or .