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South Hill Council puts off cigarette tax vote

SoVaNow.com / May 10, 2017
South Hill Town Council agreed Monday night to delay a decision on imposing a 30 cent-per-pack cigarette tax after hearing from a succession of tobacco farmers, convenience store owners and cigarette wholesalers who turned out to express opposition to the proposed levy.

Polling among Council members after a public hearing discussion showed that some members are against the idea of a cigarette tax, while others want to reduce the levy to a smaller amount. Town Manager Kim Callis said that reducing the proposed tax to 10 cents per pack would require South Hill to raise its personal property tax rate to $1.65 per $100 in tax value.

First up to speak at the public hearing was Bob Tanner, former president of the Virginia Wholesalers Association. Tanner said he would prefer more broad-based taxes that would not be as punitive on convenience stores. Tanner said cigarette sales are a large part of the convenience store business, comprising at least one-third of gross profits.

He said 52 percent of convenience store customers also buy gas, 35 percent purchase candy, soda or other items, and 17 percent buy lottery tickets. He predicted those customers would move their business out of South Hill to nearby convenience stores if the tax were approved.

Hermie Sadler, who owns a convenience store on Danville Street, said he has witnessed first-hand how damaging a cigarette tax can be to a small retail business. Ten years ago, Sadler owned a convenience store in Franklin. In terms of gross profits, he said, it was his best store. Soon after the City of Franklin imposed a cigarette tax, locals stopped shopping at his store. Then travelers and tourists stopped coming. “Cigarette and the rest of inside sales were down 50 percent,” Sadler said.

While Sadler still owns the store location, he no longer operates it. “I’m on my third tenant. There are no meaningful sales at the store, for the most part.”

Bradley Ogburn said he has lived in states which have a cigarette tax and it hurts small retailers. Big-ticket stores won’t be hurt, but he predicted that within 3-4 years, small, in-town convenience stores will be struggling.

Other convenience store owners, including Willie Bob Smith and Dale Cutler, predicted similar dire consequences should South Hill move forward with the tax. Cutler even submitted a petition signed by 760 customers who vowed to take their business elsewhere if the tax is approved.

Cutler said he’d be forced to relocate his shop because he would lose 60-70 percent of his business.

Joining the opposition to the proposed tax were tobacco farmers Jim Jennings, his son Jay, Eddie Callahan and Glenn Hudson.

“Let’s don’t be the one to help drive another nail in the coffin [of the tobacco industry]. We depend on these merchants to sell our product,” Hudson said.

Only one person at Monday night’s meeting spoke up in favor of the tax. Jimmy Thompson said, to him, the tax would act as a deterrent to smoking. “If you can deter one kid from picking up the habit, then the tax is a positive.”

The evening’s sole pointed exchange occurred when county supervisor Jim Jennings rose to speak. Last week, Jennings penned a Viewpoint letter published in The Mecklenburg Sun in which he wrote that Council members had a “limited mentality in their consideration to increase tobacco taxes,” particularly since the town “owes its very existence to the centuries-long presence of tobacco growers and markets in the area.” He also called the tax regressive. That was a point seconded by Council member Lillie Feggins-Boone, who noted that the majority of people who buy cigarettes at in-town convenience stores are low-income black citizens without the means to travel outside of town to shop.

But Council member Millie Bracey said she took offense over the use of the phrase “limited mentality,” and Mayor Dean Marion sought assurances from Jennings that the views expressed in the letter were his and not those of the Mecklenburg County Board of Supervisors.

Jennings said they were his opinions, and were not intended to offend, though he stood by his characterization.

On Monday, the Board of Supervisors passed a resolution formally opposing South Hill’s plans for the 30 cent-per-pack tax on cigarettes. The action came during the supervisors’ meeting in Boydton.

Council member Ben Taylor also weighed in during the discussion, saying that while he hopes every tobacco farmer can earn a million dollars, the truth is that the industry is in decline.

Since 1968, he noted, manufacturing jobs have outpaced those in the tobacco industry. Today only 44 farmers in Mecklenburg County grow tobacco on about 4,400 acres. Property tax revenues from tobacco are negligible compared to other sources, Taylor argued, and farmers pay no taxes on their farm machinery.

Jennings agreed, but he noted that most counties in Virginia exempt farm equipment from machinery and tools taxes. Those that don’t do so have a separate land assessment for agricultural land, he said. Land that is farmed is assessed at a lower value than other land, be it residential or industrial, he explained

Taylor said he was not diminishing the importance of tobacco, but to show that history has moved on, tobacco products and the industry should no longer be treated as sacred, protected from paying their fair share in taxes.

Speaking after his father, Jay Jennings used figures of his own to argue that Taylor’s analysis was misleading. Using numbers from 2015, Jay noted that from each bale of tobacco — weighing 800 pounds — generates $41,646 in tax revenue at all levels of government and that the economic value locally from the sale of each bale of tobacco is over $3,400. He said he gathered his numbers from the Weldon Cooper Center at the University of Virginia.

Councilman Mike Moody raised a different point — that it would be a slap in the face of the Virginia Tobacco Commission, which has given so much to the town, to impose a tax on cigarettes without fully considering alternatives.

In the end, Millie Bracey made the motion to withhold any decision on the cigarette tax. Council agreed without opposition.

Polling the members afterward, Mayor Dean Marion was told by Feggins-Boone and Vice Mayor Leroy Sasser that they would not support any tax on cigarettes.

Glenn Allen, Mike Moody and Ben Taylor favored a reduction of the cigarette tax to about 10 cents per pack and an increase to the personal property tax.

Callis said if that were to happen, Council would need to raise personal property taxes to about $1.65.

In other business, Callis announced that the Virginia Housing Development Authority had approved the Groom School renovation project for tax credits. Now, it was up to the developer to seek historic designation status for the property. The John Groom School (formerly South Hill Primary) in one of two former school buildings in town that a developer wants to convert in multi-family housing.

The scheduled asphalt overlay and traffic marking to be done on East Atlantic Street has been pushed back, according to Public Works Director Bill Wilson. It is now set to begin in June. He predicts the work will take about eight days, and local businesses will be notified well ahead of the work beginning.

Wilson said the current plan is to keep one lane open as the work progresses, but most traffic will be directed around the project.



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Comments

Still see that Ben Taylor is as big a jerk now as when he was the principal at PVHS. Some things never change.

Comments

When Ben Taylor pitched a hissy fit about the locating of the trash convenient center across from PVHS showed his level of ignorance.


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