The city of Lexington passed a 25-cent-per-pack tax on cigarettes last month. But the policy has had a mixed reception among city officials and affected stores.

Since 1960, localities have been allowed to implement a cigarette tax in the state of Virginia. But  city officials and others had several concerns that delayed the policy’s passage until now.

Lexington City Council debated the issue throughout the summer and passed the tax at their Sept. 2 meeting. The tax is slated to go into effect at the beginning of 2022. 

One of the concerns  that hindered the policy’s progress was the effect it would have on businesses within the city of Lexington.

A store manager at Kroger, Richie O’Rourke, estimated that around $1,000 worth of weekly revenue for the store came from cigarette sales.

The city of Buena Vista has not yet passed a cigarette tax. With a less than 10-minute  drive from Kroger, which is within city boundaries, to Hill Top, a convenience store that sells tobacco in Buena Vista, O’Rourke said he worries his store could lose cigarette revenue to stores in Buena Vista.

In addition to business concerns, some members of Lexington City Council have raised  questions about the tax’s effects on consumers.

Council Member Leslie Straughan, who voted for the tax, said she doesn’t think the tax will actually deter smoking in the community.

“The research I’ve done shows that generating that kind of ‘sin tax’ has not helped with  reducing cigarette smoking,” Straughan said.

Straughan also said she has concerns about how the policy will affect low-income individuals.

According to the Centers for Disease Control and Prevention, low-income individuals are  disproportionately likely to smoke and have less success quitting smoking than those who are above the poverty line.

“Personally, I don’t like the cigarette tax because it is shown to disproportionately affect lower  income people, and I don’t think that’s the right group we want to tax,” Straughan said.

For Straughan, her main reason for passing the tax is to generate revenue. 

Lexington Mayor Frank Friedman estimated that the tax would increase revenue by anywhere from $30,000 to $80,000 per year.

Friedman also said that Lexington purposefully chose a rate of 25-cents-per-pack with businesses in mind.

He said that Augusta County, which neighbors Rockbridge County, was considering a 30-cent tax. Augusta County has currently approved a 15-cent tax.

Compared to a 30-cents-per-pack tax, “we thought 25 [cents] was not quite as punitive,” Friedman said.

Friedman said the goal is to strike a “happy medium,” where the tax is large enough to   discourage smoking but also small enough to where it will not hurt Lexington businesses.

He suggested that the city of Lexington and  Rockbridge County may reconfigure the tax if Augusta County continues with their 15-cent tax. But Friedman said he doesn’t expect the city  to raise cigarette taxes further.

Alongside the cigarette tax itself, state and local sales taxes are also applied to cigarettes, which  can add up to around a 54-cent increase per sale.

The city hasn’t decided where or how the revenue will be distributed.

Lexington’s city manager, James Halasz, has advocated for allocating the money towards parks and tourism.

Another idea is to allot money to projects at Jordan’s Point to improve the quality of the park.

While raising revenue is the main intention behind the tax, Friedman said that the tax is still intended to discourage smoking.

“There’s the intention for it to discourage people [from smoking], but if you’re going to smoke,  you’re going to pay that extra tax,” Friedman said.

Cigarettes are generally considered to be an inelastic product for smokers, meaning consumers will buy it at any price.

However, Friedman pointed to various resources in the community that encourage people to live  healthier lives, such as the Rockbridge outdoors, community service boards and public schools educating people on healthy lifestyles.

While those measures may not help those already addicted to smoking, Friedman said he believes education will help the next generation avoid addiction.

Friedman also said that those in Lexington were not the primary targets for this tax. 

Straughan said the hope for the tax is that it will target highway traffic from I-81. She said cigarette purchases from non-Lexington residents would maximize the impact the tax could  have for the city of Lexington.