Cigarette tax legislation overhauled; regional board participation mandate removed

February 9, 2021

Legislation that would have mandated county participation in regional cigarette tax boards before the imposition of a cigarette tax has been significantly amended on the Senate floor.  As reported from the Senate Finance and Appropriations Committee, SB 1326 (Hanger) would have mandated that any locality that was not already imposing a cigarette tax on January 1, 2021, must be a member of a regional cigarette tax board in order to impose the tax.  A regional cigarette tax board was defined in this version of the bill as encompassing at least 10 member localities.  The bill made an exception for certain localities that had taken official steps by January 31, 2021, toward implementing a cigarette tax to impose the tax until January 1, 2026, after which time the locality would have to be part of a regional board in order to impose the tax.  VACo opposed the bill in this form.

As amended on the Senate floor, the legislation now no longer includes the mandate to participate in a regional cigarette tax board.  The bill stipulates that it is the policy of the Commonwealth that regional boards are to be encouraged where practical, and directs the Department of Taxation to establish a task force to develop methods for modernizing cigarette tax collection and to aid localities seeking to develop new regional cigarette tax boards (which would now be defined as encompassing up to six member localities).  VACo appreciates Senator Hanger’s willingness to revise the bill to accommodate the concerns of VACo members, and thanks members for making those concerns heard.

VACo has been in communication with a number of member counties that are interested in pursuing a regional approach, and looks forward to working with the task force on ways to assist in establishment of those boards.

VACo Contacts:  Dean A. Lynch, CAE and Katie Boyle

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