WINCHESTER — The Democrat-controlled City Council is driving an effort to increase Winchester’s cigarette tax rate by as much as 20 cents per pack.
At the request of Councilor Kim Herbstritt, City Manager Eden Freeman presented information Tuesday night detailing the potential fiscal impact of a higher tax on smokers.
Winchester’s current cigarette tax of 35 cents per pack, adopted in 2014, nets the city an estimated $610,000 per year, Freeman said. Each penny added to that amount would generate an additional $17,000, so a 20-cent increase could bring in an extra $340,000 per year, resulting in total annual tax revenues of $950,000.
“All that is assuming that cigarette sales stay constant,” Freeman said.
Councilor Corey Sullivan said taxing a product that is detrimental to a person’s health sounds like an easy revenue generator, but he wondered if it could eventually lead to taxes on other unhealthy products like potato chips, sugar and salt.
Councilor Bill Wiley said higher cigarette prices in Winchester could eventually compel customers to make their purchases in other localities that don’t assess a local tax on top of state taxes, including Frederick County.
In Virginia, only cities and towns are allowed to impose a local tax beyond the state taxes currently assessed on cigarettes, which average about 54 cents per pack.
However, that doesn’t necessarily mean that cigarettes are cheaper in Frederick County. Freeman said she has seen some county retailers capitalize on the tax discrepancy with Winchester by raising their retail prices so the total cost of a pack of cigarettes is only about 5 cents less.
If a higher cigarette tax in Winchester were to drive consumers to Frederick County, it could hurt sales of other items offered by convenience and grocery stores and decrease the city’s annual sales tax revenues.
“I don’t see from an economic perspective how it’s beneficial to the city,” Councilor John Willingham said.
The Republican members of council — Sullivan, Wiley, Willingham and Les Veach — were the only ones to voice concerns about the tax-increase proposal. The panel’s five Democrats — David Smith, John Hill, Evan Clark, Judy McKiernan and Herbstritt — were very supportive of the idea.
“There are billions of dollars lost [nationally] every year from the health impacts of tobacco,” Herbstritt said. “I think it’s an important thing to do for our residents.”
Clark said he isn’t overly concerned about Winchester smokers going elsewhere to buy less-expensive cigarettes.
“I think the great majority of purchases is one or two packs per customer at a convenience store, and they want those right now,” he said.
McKiernan said the tax’s revenue potential should be secondary to the health benefits of a price increase that could compel people to stop smoking.
“If there are less cigarettes being sold, all the better for our community,” she said.
With a 5-4 consensus of council support, Freeman said she would return to the next work session on April 23 with a proposed ordinance to raise the cigarette tax.
A previous attempt to raise the tax from 35 cents to 53 cents per pack was defeated in April 2017 on a 5-4 vote. Republicans Willingham, Wiley, Veach, Sullivan and then-councilor Kevin McKannan opposed the measure, while Democrats Smith, Clark and Hill supported it. The only Republican who favored the increase was Milt McInturff, who was unseated by Herbstritt in November’s election.
In other business at Tuesday night’s meeting and work session, City Council:
Unanimously approved a resolution to designate an unnamed road in Jim Barnett Park as Spottswood Poles Drive, a tribute to the Winchester native who excelled in baseball and was a decorated hero in World War I.
Voted 8-0 to approve the nomination of Mike Birchenough to an unexpired Ward 1 term on the city School Board that ends June 30, 2021. McKiernan, an employee of Winchester Public Schools, abstained from the decision.
Held a first reading of an ordinance to vacate and convey to City Yards an 883-foot-long portion of land near Summit Avenue.
Unanimously approved a conditional-use permit request from Sean Murphy to allow residential use of a building at 1019 Berryville Ave., located in the Highway Commercial (B2) zoning district.
Met in executive session for one hour and 15 minutes to seek legal advice from interim City Attorney Robert Mitchell and consider appointments to the School Board, Handley Board of Trustees, Social Services Advisory Board, Parks and Recreation Advisory Board, Environmental Sustainability Taskforce and Lord Fairfax EMS Council. No action was taken following the closed-door discussions.