Translate[Archived] Question #03: What would a $0.04 increase (from $1.26 to $1.30) and a $0.09 increase (from $1.26 to $1.35) in the cigarette tax generate? What has the cigarette tax funded in the past?
Question:
What would a $0.04 increase (from $1.26 to $1.30) in the cigarette tax generate? What would a $0.09 increase (from $1.26 to $1.35) in the cigarette tax generate? What has the cigarette tax funded in the past?
Response:
The City levies a tax on every person who sells, distributes, or uses cigarettes. There is no State limit on cigarette tax. The current cigarette tax is $1.26 per pack of cigarettes sold. Based on actuals and an estimated 3.1% year-over-year decrease in number of packs sold, each 5 cents increase would generate $107,667 in additional FY19 cigarette tax revenue.
As seen in the tax alternative options section of the proposed FY 2019 budget, an increase of 9.0 cents on the current cigarette tax will increase revenue by approximately $0.2 million. An increase of 4.0 cents on the current cigarette tax will increase revenue by approximately $90,000. Staff recommends that if Council decides to increase the cigarette tax, it should do so by at least 9 cents as anything less than that does not raise significant monies. It should be noted that cigarette tax revenue has been declining in recent years, and that the amount of revenue generated in future years would be less than FY 2019. The last rate increase in FY 2017 of 11 cents produced just enough revenue to return FY 2017 collections to the amount collected in FY 2015 at an 11 cent lower rate.
In past years, cigarette tax increases have been used to support Neighborhood Health, Dental Care, and Smoking Cessation at Alexandria Redevelopment & Housing Authority Properties.
The City's current cigarette tax rate exceeds those of other Virginia Cities by at least 41 cents: 