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South Boston sets aside cigarette tax decision for 90 days / July 12, 2018

Facing backlash from tobacco sellers and industry representatives, South Boston Town Council agreed Monday night to put off action on a cigarette tax for 90 days while considering other ways to raise salaries of the town’s lowest-paid staff.

The proposed cigarette tax — reduced to 10 cents, from the initial plan for a 25 cent-per-pack levy — was criticized by opponents as unfair and ultimately an ineffective way to raise revenue for the town. The tax was suggested by Town Manager Tom Raab as a way to generate income to support a pay increase for employees making less than $40,000 a year.

Blue Ridge Tobacco and Candle, located in the Riverdale shopping plaza, had two representatives show up for Council’s public hearing Monday night: business owner Frank Armstrong (who owns another outlet in Danville) and manager Cheryl Deal, each of whom denounced the tax.

Armstrong predicted the cigarette tax would have “unintended consequences” and observed that businesses in Martinsville reacted negatively when the city council enacted a tax that now stands at 30 cents per pack. “As a result, all the new businesses were built outside the city limits, there have been businesses within the city limits that have closed — unable to operate because everybody goes, frankly, right outside of town.”

After Martinsville upped its cigarette tax from 20 cents to 30 cents, “in the last six months, six businesses have closed, small businesses, not the larger chains. Those guys can afford it.”

Beyond the negative effects on the local economy, Armstrong advised that the tax is not a reliable source of revenue. “Cigarettes, right now, are on a decline. They’ve declined 5-7 percent. As a result, you’re billing a resource that is going to be declining for you every year.”

Deal, local manager at Blue Ridge Tobacco and Candle outlet for 13 years, expressed frustration that the tax would not treat businesses the same due to their location. “I have Sheetz, which is on my left. I have Supply Line, which is on my right. Both of those are in the county, not in the city. I’m the only one right there in the city in that little space,” Deal said.

She echoed Armstrong’s argument that business would move outside town limits rather than pay the tax year after year. Deal told Council members, “I’m not understanding where you are going to get your money from, because if they don’t come to me, and I slowly go out of business, those two [Sheetz and Supply Line] are in the county and people will go to Sheetz or they will go to Supply Line.

“There’s your dollar going to the county,” she said.

Deal referenced several other convenience stores in South Boston that would potentially see their business hampered by the tax. She named Murphy’s Gas House, Blue Ridge Tobacco, and the collection of Apple Markets to show the range of businesses impacted. “We’re all in the city,” she said.

A 10 cent-per-pack tax would add significantly to the price for customers who buy by the carton — and “most of my customers are carton buyers,” she said. “If you take ten times ten, that’s a dollar per carton more.” She sympathized with smokers who would be willing to go further to avoid paying an extra dollar for every carton, saying, “A hop, skip, and a jump to save a dollar? I’ll do it. And so will they.”

Ricky Newbill also spoke and offered a different perspective: “I’d like to bring you into my world a little bit, about what it’s like for the tobacco smoker.” He said the most valid argument against the tax was that smokers are being targeted while the rest of the population is left alone.

“Let’s face it, we know the truth about tobacco. That tobacco is not healthy, we’re not here to argue that. But we also live in a country with freedoms and people have a right to do things they want to do.”

Newbill, also manager of the South Boston Gas House, said a 10 cent tax sounded better than 25 cents, but he believes it would still negatively impact sales. “My customers are so familiar with the price of their product that they buy that when they come to my window they’ve — in many cases — got the exact change with them.

“Let’s face it: human beings are strange sometimes. I mean, we all have our peculiarities about us,” he said. “I’ve got some customers who I love dearly, they’ll calculate before they come to my window how much gas they’re going to get so they can get this cigarette. I mean down to the penny.”

He added, “They need that pack of cigarettes.

“I’m going to get hit, but these folks are going to get nailed,” he said.

Don Hullet, a representative with GPM Investments which owns several Apple Markets in town, told Council, “We oppose it because it is going to lose jobs. People are going to take their snacks and drinks outside of town to buy them. We’ve seen it in Altavista, we’ve seen it in Martinsville, and we’ve seen it in towns in North Carolina.”

Hullet lives in Alton.

Council member Winston Harrell, after hearing arguments from the business community, said would he oppose any tax, citing the comments on how price sensitive consumers are.

Bob Hughes said he still supported the tax, pointing out that the Martinsville tax began at 20 cents, twice the amount South Boston is considering. “As a previous employee of Phillip Morris, I understand taxes on cigarettes,” said Hughes. “Regardless of what the decision is, its still a resource when it comes to operating a town.”

Michael Byrd wondered, “In the next year, couldn’t the price of cigarettes go up anyway?” He considered how much of an effect the tax really would have on the net price of cigarettes in the convenience stores and consumer behavior.

Vice-Mayor Tina Wyatt-Younger questioned whether the tax would have the predicted impact on consumer behavior and suggested the benefits of the tax could outweigh the negatives. “As a Council, we have to be there for the entire town.” She reminded Council that South Boston needs to give town employees a raise.

Sharon Harris, presiding at her first meeting after being elected in May, suggested that the tax should be reconsidered while the Finance Committee examines the budget for any areas that could be tightened. Byrd joined Harris on this idea, and the Council adopted a motion to hold off action for another 90 days while the budget is reviewed. Much of that work will be done in a work session later this month.

In other business,

» Council reappointed Frank Lee and George Burton to the Industrial Development Authority and Ann Connor to the Halifax County Public Library Board of Trustees. For an opening on the Southside Planning Commission, Ernest Bass was reappointed, but Allan Smith — suggested by Wyatt-Younger —was chosen to replace Coleman Speece.

Harris, previous the citizen representative to the Town’s planning commission, was given Hughes’s role as the elected representative after Hughes chose to cede the position. They agreed, however, to retain their respective roles until December to allow time to select a new replacement for Harris.

» Dennis Witt, chairman of the Halifax County Board of Supervisors, last week formed an ad hoc committee and asked for representatives from the Town to serve. The panel will focus on developing a land use ordinance for the county to replace the ag/forestal districts that the county will eliminate at the end of December. Mayor Ed Owens tapped Raab and Harris as the Town’s representatives.

» Raab announced that Alan Auld, the town’s retired public works director, had passed away from complications with diabetes. Council members expressed their sorrow. Raab also congratulated the emergency services and the Town employees who oversaw the fireworks display.

» During citizen commentary, Bill McCaleb, a member of the Halifax County Improvement Committee, asked Council if there was anything it could do about the amount of litter in Halifax County. He said the Improvement Committee was planning a “Clean Up Halifax County Day” in 2019 that aimed to get families to pick up a bag of trash off the roadside.

“Lord knows there’s enough out there that every family should be able to pick up a bag of trash,” McCaleb said.

Owens asked South Boston Police Chief James Binner what the department’s stance on litter was, and he responded it was a zero tolerance policy but that it was a “tough one for police to do something about.”

Bill Snead commented that he often drove hundreds of miles per week in Halifax County and seldom witnessed littering. He said that the perpetrators would not throw their trash out when someone was behind them.

Byrd ended the meeting by addressing the rest of Council as a private citizen to thank Chief Steve Phillips of the South Boston Fire Department for representing the department well at a function with Byrd.

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