- The Washington Times - Friday, February 20, 2004

RICHMOND — The state Senate yesterday gave final passage to a $3.7 billion tax increase that forms the revenue basis for substantial boosts to education, health care and transportation in a budget plan a Senate panel will release tomorrow.

Sen. John H. Chichester’s omnibus tax bill would boost sales taxes by a penny, raise gasoline taxes and set higher income tax rates while it curbs taxes on groceries and the estates of the wealthy. It cleared the Senate 27-12.

The Senate also voted 26-12 for a bill that would increase the state’s cigarette tax, the nation’s lowest at 2.5 cents per pack, to 35 cents over two years and, on a 22-17 vote, approved a bill that would give tobacco giant Philip Morris a $6 million corporate tax credit on cigarettes it exports.

Senate conservatives who tried unsuccessfully Thursday to water down Mr. Chichester’s bill made one final appeal to stop the tax increase.

Sen. Kenneth T. Cuccinelli II, Fairfax County Republican, said that according to his math, an annual tax increase of slightly more than $1.8 billion “dividing that number by 7.3 million people in the commonwealth comes to $246.57 a person or almost $1,000 for a family of four per year. That’s all I’ll say.”

Mr. Chichester, Stafford Republican and chairman of the tax-writing Senate Finance Committee, said the bill establishes revenue sources that will fund core services such as public schools and colleges, public safety and health care now threatened by severe, recurring budget shortfalls.

“We lose state police [officers] on a regular basis to higher-paying jobs. Our deputies … some are receiving food stamps in some quarters of Virginia,” Mr. Chichester said.

“I hope that you would see fit to take the strong step, and this is a strong step for you — something you have not been asked to do for many years,” Mr. Chichester said.

The bill that would increase the cigarette tax to 20 cents this year and to 35 cents next year passed with little discussion, but Democrats and Republicans joined to argue passionately against the proposed tax break for Philip Morris on cigarettes made to sell abroad.

Sen. Bill Mims questioned how, less than an hour after passing a record tax increase bill, the Senate could vote to forgo millions in revenue from a major multinational corporation with strong earnings.

“This is bad policy and from the standpoint of trying to explain it to our constituents, it can’t be explained,” said Mr. Mims, Loudoun County Republican.

He said plenty of major corporations in his region — America Online, MCI, US Airways — are in difficult financial times but aren’t seeking state tax breaks. And if they were, he said, “I’d have to say no, not this year; not until our state’s finances are in better shape.”

Sen. Yvonne B. Miller, Norfolk Democrat, said the deal looked like a kickback to the corporation for relocating the world headquarters of its cigarette division from New York to Richmond last year.

“In the old days, they said kickbacks were illegal,” she said. “People have gone to prison for the things we are pushing today in this Senate.”

The bill’s sponsor, Sen. Walter A. Stosch, represents the Richmond suburb where Philip Morris moved its executives. He said if Virginia doesn’t provide the maker of Marlboros and Virginia Slims the same breaks North Carolina affords cigarette makers, thousands of jobs could be lost.

“Philip Morris owns plants all over the world, so there’s nothing that says they have to make these cigarettes in Virginia,” said Mr. Stosch, Henrico Republican.

Sen. Charles R. Hawkins, a Pittsylvania Republican whose district takes in much of Virginia’s tobacco-growing Southside region, said the tobacco industry has lost enough jobs.

“Not everybody is going to wear a white lab coat, drive a BMW and eat quiche,” Mr. Hawkins said. “This is about working families who want to send their kids to college.”

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