- The Washington Times - Thursday, June 30, 2005

Virginians will save money on their groceries but spend more on cigarettes when two tax changes take effect today.

The sales tax on food will decrease from 4 cents per dollar to 2.5 cents per dollar.

According to the Virginia Department of Taxation, the food tax cut will save a family of four with an income of $60,000 about $83 a year. A family of four with an income of $100,000 will save about $105 a year.

The cigarette tax will increase from 20 cents to 30 cents per pack, costing a pack-a-day smoker $36.50 more per year than last year.

The cigarette tax increase was part of a $1.38 billion tax-reform package passed by the legislature last year to avoid government shutdown and preserve the state’s prized AAA bond rating. The package also increased the sales tax and the tax on real estate transactions and imposed an excise tax on other tobacco products.

Revenue from the cigarette tax will provide health care for children from low-income families and elderly and disabled Virginians.

“Tax reform was really that,” said Ellen Qualls, a spokeswoman for Gov. Mark Warner. “It wasn’t just the sales and cigarette tax increase. There really were tax cuts to make the system more fair, meet our core commitments and preserve our fiscal integrity.”

The food tax originally was scheduled to be reduced in half-cent increments over three years. An unexpected budget surplus prompted Mr. Warner, a Democrat, and the legislature to expedite the cut. It does not apply to food bought in restaurants.

“Reducing the tax on food will help all Virginians, but it will provide the greatest benefit to working Virginians because they spend a larger proportion of their income on food,” Virginia Tax Commissioner Kenneth W. Thorson said.

The legislature eliminated the sales tax on nonprescription drugs several years ago. The tax on other items, including nonfood items at the grocery store, remains a nickel on the dollar. That means a shopper buying a loaf of bread, a bottle of aspirin and a roll of paper towels is taxed at three separate rates for each item.

When Virginians file their state income taxes next year, they will see many of the tax cuts passed last year.

The tax-reform package raised the personal and dependent exemption from $800 to $900, raised the standard deduction for married taxpayers filing jointly from $5,000 to $6,000, and the standard deduction for married taxpayers filing separately from $2,500 to $3,000.

It also removed about 142,000 taxpayers from the tax rolls by raising the filing threshold.

This article is based in part on wire service reports.

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