The Loudoun County Board of Supervisors voted on Wednesday to establish a 40-cents-per-pack cigarette tax that will take effect on November 1.
County staff estimated an annual net revenue of $2.2 million from the tax.
Despite pushback and requests from smaller convenience store owners to stagger the rate increase, the cigarette tax was approved will apply countywide, including to any incorporated towns which have not elected to adopt a cigarette tax of their own. The Town of Hamilton is the only town that does not levy its own cigarette tax.
Chairwoman Phyllis Randall (D-At Large), who made the motion, received six votes to authorize the ordinance. Supervisors Tony Buffington (R-Blue Ridge) and Caleb Kershner (R-Catoctin) were absent for the vote. Supervisor Matt Letourneau (R-Dulles) abstained.
“With all due respect to convenience stores, to ask me to hold off a little bit longer for your little death sticks so that you can get a little bit more money and then change your business model, is not something that I think is okay to even ask me to do, to be quite honest,” Randall said.
While the adoption of a cigarette tax would generate additional county revenues, the goal of a tax rate is typically to change consumer behavior leading to healthier outcomes for individuals, the Sept. 8 county staff report states.
On July 1, Virginia Code 58.1-3830 gave localities the authority to levy a cigarette tax of up two cents per cigarette ($0.02) or 40 cents ($0.40) per pack of 20.
Last November, the board directed staff to pursue implementation of a cigarette tax rate of 40-cents per pack and petition the Northern Virginia Cigarette Tax Board (NVCTB) for admission after a recommendation by the board’s finance committee meeting.
NVCTB is in the process of scheduling a meeting to consider petitions for admission, according to the county staff report.
Should the county receive admission, the tax board will begin administration, collection, and enforcement of the cigarette tax in Loudoun.
In exchange for their services, NVCTB will withhold a portion of Loudoun’s cigarette tax revenues to cover the cost of administering the tax. Administrative fees will be proportionate to the number of packs sold in the county compared to the other member jurisdictions.
Motion to lower per-pack rate fails
Supervisor Mike Turner (D-Ashburn) made a substitute motion to change the proposed rate from 40 cents-per-pack to 20 cents, and consider at a future business meeting an additional 20 cents per pack rate by Jan. 1, 2023. The motion failed 2-5 with only Letourneau and Turner supporting the substitute motion.
Turner said one convenience store owner reached out to him to consider the impact of the cigarette tax. But if the ordinance were to pass, Turner said the owner urged the board to consider breaking up the 40 cent increase into two parts.
Turner said businesses have been challenged over the past 20 months and believed the store owners request was well thought out.
Letourneau said he supported the substitute motion because independent convenience store owners are at a disadvantage compared to larger stores that receive discounts from tobacco manufacturers.
He also pointed out that unlike Loudoun’s new tax, Fairfax taxes cigarettes at a rate of 30 cents-per-pack.
“It’s not going to do any good if people just go somewhere else, buy the same product for less, because then we’re not stopping them from smoking, and we’re not getting the revenue,” Letourneau said.
Vice Chairman Koran Saines (D-Sterling) disagreed with the suggestion that smokers would travel to different areas because “its 10 cents or 15 cents cheaper.”
“It’s not happening,” he said. “Sorry.”