Virginia Gov. Ralph Northam unveiled his 2020-2022 budget proposal today, which included a doubling of the state’s tobacco tax rate from 10 percent to 20 percent of the wholesale price.
In the case of a cigar with an MSRP of $9.50, that would mean an increase in price from $10.45 to $11.40 by halfwheel estimates, and before any additional sales taxes were added.
Northam is also proposing that the state’s cigarette tax be doubled from 60 cents per pack to $1.20. Currently, Virginia has the second lowest cigarette tax rate in the country behind only Missouri, which taxes cigarettes at 17 cents per pack.
The funds generated from the increases in the tobacco tax rates would be used to reduce insurance marketplace premiums by 20 percent, as the governor is calling for a state reinsurance program that will help keep premiums stable and helps insurers cover high-need individuals.
The budget now goes to the General Assembly for debate.