The Arlington County Board is considering withdrawing from the Northern Virginia agency that distributes cigarette taxes to local governments after being told the agency is inefficient and incompetent.

The board deferred action yesterday on a request from Revenue Commissioner Geraldine M. Whiting to have the county terminate its membership in the Northern Virginia Cigarette Tax Board until there are assurances that steps will be taken to reduce the board's costs and improve its auditing procedures.

Both Whiting and the county's financial staff, which gave a conditional endorsement to continued membership in the tax agency, complained about its failure to maintain certain records and scrutinize its budget.

The tax board, composed of representatives of eight Northern Virginia localities, has a five-member private staff to collect and distribute what has been nearly $5.5 million a year in local cigarette taxes. Arlington, which like Fairfax County can, under Virginia law, impose a tax of no more than five cents a pack, collects about $900,000 a year from the tax.

"Continuing membership insults the intelligence of the Arlington County Board in particular, and the citizens of this county in general . . . " Whiting said in a memo to the board. She was responding to what she said was the tax board's "absurd" request recently to increase its operating expenses from four to six percent of its revenues.

Such an increase, Whiting contended, "rewards inefficiency and incompetence. Arlington County is being taken advantage of unfairly by its continued membership in this organization."

Neither Bradford Hammer, Alexandria's deputy city manager who is chairman of the tax board this year, nor Jim Taylor, the tax board's administrator, could be reached for comment yesterday.

Whiting, who has opposed the tax board for years, wants its duties shifted to her office, which she maintains is better equipped to handle the tax collections and could save Arlington $50,000 annually. The savings, she contends, would come from having her own staff collect the taxes and by eliminating discounts given to wholesalers for their aid in administering the tax.

Whiting's figures have been questioned by the county's financial staff, which predicated its recommendation for continued membership on reforms at the agency. The County Board deferred action on continued participation until the tax board could assure Arlington the reforms would be implemented.

"We still believe a regional (agency) is the more cost-effective approach to administering the tax," said Anna Lee Berman, director of the county's management and finance department. An Arlington-administered system could duplicate efforts of the tax board staff and not result in any substantial savings because of the extra work that the county staff would have to undertake, she said.

Alexandria, which like other Virginia cities can impose an unlimited tax on cigarettes, recently rejected a proposal to withdraw from the tax agency for similar reasons, Berman said. Arlington and Fairfax counties are the only counties permitted by the state to tax cigarettes, and have a state-imposed five-cent ceiling. Tax Agency Denounced Arlington Considers Leaving Cigarette Unit By Nancy Scannell Washington Post Staff Writer

The Arlington County Board is considering withdrawing from the Northern Virginia agency that distributes cigarette taxes to local governments after being told the agency is inefficient and incompetent.

The board deferred action yesterday on a request from Revenue Commissioner Geraldine M. Whiting to have the county terminate its membership in the Northern Virginia Cigarette Tax Board until there are assurances that steps will be taken to reduce the board's costs and improve its auditing procedures.

Both Whiting and the county's financial staff, which gave a conditional endorsement to continued membership in the tax agency, complained about its failure to maintain certain records and scrutinize its budget.

The tax board, composed of representatives of eight Northern Virginia localities, has a five-member private staff to collect and distribute what has been nearly $5.5 million a year in local cigarette taxes. Arlington, which like Fairfax County can, under Virginia law, impose a tax of no more than five cents a pack, collects about $900,000 a year from the tax.

"Continuing membership insults the intelligence of the Arlington County Board in particular, and the citizens of this county in general . . . " Whiting said in a memo to the board. She was responding to what she said was the tax board's "absurd" request recently to increase its operating expenses from four to six percent of its revenues.

Such an increase, Whiting contended, "rewards inefficiency and incompetence. Arlington County is being taken advantage of unfairly by its continued membership in this organization."

Neither Bradford Hammer, Alexandria's deputy city manager who is chairman of the tax board this year, nor Jim Taylor, the tax board's administrator, could be reached for comment yesterday.

Whiting, who has opposed the tax board for years, wants its duties shifted to her office, which she maintains is better equipped to handle the tax collections and could save Arlington $50,000 annually. The savings, she contends, would come from having her own staff collect the taxes and by eliminating discounts given to wholesalers for their aid in administering the tax.

Whiting's figures have been questioned by the county's financial staff, which predicated its recommendation for continued membership on reforms at the agency. The County Board deferred action on continued participation until the tax board could assure Arlington the reforms would be implemented.

"We still believe a regional (agency) is the more cost-effective approach to administering the tax," said Anna Lee Berman, director of the county's management and finance department. An Arlington-administered system could duplicate efforts of the tax board staff and not result in any substantial savings because of the extra work that the county staff would have to undertake, she said.

Alexandria, which like other Virginia cities can impose an unlimited tax on cigarettes, recently rejected a proposal to withdraw from the tax agency for similar reasons, Berman said. Arlington and Fairfax counties are the only counties permitted by the state to tax cigarettes, and have a state-imposed five-cent ceiling.