The Prince William County Finance Department, at the request of the Board of County Supervisors, presented a revenue diversification plan to the Board that considers meals, admissions and cigarette taxes to fund education and public safety needs in the County.
Counties in the Commonwealth can charge taxes on admissions and tobacco provided they first receive enabling legislation from the Virginia General Assembly. Counties can only levy meals taxes by passing a citizen referendum or gaining specific authorization to do so from the General Assembly.
The tobacco tax (commonly referred to as the cigarette tax), is limited by the state to a maximum of 30 cents per pack of cigarettes. Admissions taxes are applied to the cost of admission to charity events, events sponsored by public and private educational institutions, museums, gardens, zoos and sporting events. The meals tax is capped by the state at 4 percent.
According to the presentation, a 4 percent meals tax, which would apply to restaurant purchases and exclude grocery store purchases, could bring in an estimated $16 million. Staff recommended using those revenues to be earmarked for education. A 10-percent admissions tax would net the County approximately $1.8 million; and a cigarette tax would bring in roughly $3.3 million, which staff recommended be earmarked for public safety.
Cigarette, admissions and meals taxes are self-generated, “point of purchase,” user taxes which means that the purchaser has full control and discretion over each decision to purchase. The tax burden from point of purchase taxes is distributed only among users and provides the opportunity to capture revenue from non-residents.
Arlington County levies tobacco and meals taxes, which bring in $3.1 million and $33.3 million respectively. Fairfax County’s cigarette taxes bring in $8.9 million. Roanoke, Spotsylvania and Stafford counties levy meals taxes that bring in a total revenue of roughly $17.1 million.