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New cigarette tax approved in Amherst County

New cigarette tax approved in Amherst County

lighting a cigarette

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AMHERST — The price of cigarettes in Amherst County is set to go up in mid-2021 through a newly approved tax, a measure county officials estimate will yield $1 million or more in annual revenue.

The Amherst County Board of Supervisors voted 4-1 Tuesday to approve the new tax effective in July. Supervisor David Pugh opposed the move.

The county is taxing 27 cents per pack following recent legislation from the General Assembly allowing counties to implement cigarette taxes as cities and towns do. The $1 million or higher estimated to come from the tax is planned to help supervisors set money aside for future capital improvement projects while lessening the strain on other money sources.

“Although of course only time will tell,” County Attorney Michael Lockaby said of the county receiving the full estimated amount if cigarette sales do not decline.

In emails recently sent to the board, several owners and operators of county stores, plus the National Association of Tobacco Outlets, opposed the new tax they fear will be harmful to business.

Anthony Belcher, general manager of an Exxon 76 gas station in Madison Heights, said the new tax is a major concern for the business, which counts cigarettes, beer and gas as among its top-selling products.

“The tax scares us,” Belcher said during a public hearing Tuesday. “People already have a hard time paying the price now. We don’t want to incur the loss of not only cigarette sales but of gas and other revenue.”

Belcher added he’s noticed in other stores when the cost of cigarettes goes up, sales decrease.

The city of Lynchburg taxes cigarettes at 35 cents per pack while the town of Appomattox taxes at 27 cents, the town of Bedford at 30 cents and the town of Altavista at 25 cents, according to the local governments websites. The town of Amherst does not have a cigarette tax.

Amherst County Administrator Dean Rodgers said he has spoken with administrators in two neighboring counties who plan to propose cigarette taxes. “We’re just the first out of the chute,” Rodgers said.

Pugh said while the tax can provide needed revenue for the county, he is concerned with the effects on residents with low incomes and businesses struggling with low profit margins.

“This is a tough one,” Pugh said. “We don’t know how much it will bring in and I have a feeling our cigarette sales will go down dramatically …”

He said the county not having a cigarette tax is attractive to those who come to Amherst County from Lynchburg to buy them and spend money in the county.

“The lack of [a tax] now is a draw for customers,” Pugh said. “Our small businesses are at an advantage because of that. It’s going to hurt our local convenience stores pretty heavily.”

Pugh said he would be willing to support the measure if the tax was lower and more competitive with surrounding areas. Rodgers has said the new tax is a revenue stream that reduces the reliance on raising the real estate tax rate.

The board in recent budget discussions considered a real estate tax hike, which would have been the first in four years, but held back when the COVID-19 pandemic hit the local economy in March.

“I’m pretty sure in the future we will have to raise taxes,” Pugh said. “It’s just the nature of government.”

Rodgers said the county’s $1 million revenue estimate is “very loose” and is planned for one-time capital expenses, rather than for recurring items in the annual budget, because it can be more easily adjusted if projections aren’t fully met.

Chairwoman Claudia Tucker said she has received a lot of phone calls expressing concern with the new tax.

“It’s a hard vote,” Tucker said.

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