Posted on 09/13/2016 3:35:40 PM PDT by Drango
California is once again in the national bull’s eye for a proposed major hike in its tobacco excise tax, with both sides touting potential ripple effects upon public health and the tobacco industry.
Proposition 56, which is on the Nov. 8 ballot, gives Californians the ability to raise the tax by $2 per pack to $2.87.
California is not only the nation’s most populous state at 39.1 million, but also a trend setter for statewide propositions and referendums, Since Californians are responsible for about 6.6 percent of the U.S. cigarette and snuff volume consumption, analysts have said the effect on the manufacturers’ bottom lines would be comparable to a 7-cent cigarette tax increase nationwide.
More than $35 million in tobacco manufacturer funds have been provided to an opposition committee, including $13.2 million from R.J. Reynolds Tobacco Co. and its affiliates.
The tax, if approved, would begin in April and would become the ninth highest in the country. Earlier this year, California became the second state to raise to 21 the minimum age for consuming most tobacco products. Similar tax increase efforts in California were defeated in 2006 ($2.60 per pack increase by a 52 percent to 48 percent margin) and in 2012 ($1 per pack increase by a 51 percent to 49 percent margin). Some analysts question whether the size of the increases proved too much for some voters.
New York has the highest state excise tax at $4.45, while North Carolina has the fifth lowest at 45 cents. The tax would be applied to other tobacco products, including electronic cigarettes and vaporizers. Adding electronic devices to the tax increase has generated an intense public-harm debate, given that authors of several prominent studies claim e-cigs and vaporizers can be as much as 95 percent less harmful than traditional cigarettes.
Right-leaning think tank R Street has called Prop 56 “a misguided effort that will harm both public health and consumer choice.” “With many cigarette smokers having switched to vaping to cut down or quit smoking, the expansion of tobacco restrictions and tax rates to vaping raises many eyebrows, even from some physicians and health advocates,” said Cameron Smith, Western region director for R Street.
A money issue
As of Thursday, Reynolds and affiliates have provided $13.2 million to the Stop the Special Interest Tax Grab committee that it helped form, according to the California Fair Political Practices Commission. Another $22.1 million has come from Philip Morris USA and affiliates, along with $1.51 million from ITG Brands LLC and affiliates. Overall industry contribution to the committee is $37.5 million.
Reynolds spokesman David Howard said Friday that the manufacturer funds the committee to help in “conducting a vigorous campaign to educate California voters on the facts of the initiative and why it deserves their ‘no’ vote on Election Day.”
On the Prop 56 supporters’ side, a combined $17.1 million has been contributed, led by $10 million from the California Hospitals committee on issues, along with $2.09 million from the California State Council of Service Employees issues committee. “Revenue from these higher taxes would be used for many purposes, but primarily to augment spending on health care for low-income Californians,” according to the Yeson56 committee.
Tom Steyer, a San Francisco billionaire environmentalist who gave $1 million in support of Prop 56, said in a statement that a tax increase “will save lives and reduce health-care costs, and we believe Californians will see through tobacco industry lies.” The Big Three manufacturers argue they already have contributed tens of billions of dollars toward state efforts aimed at improving public health related to tobacco products.
However, many states, including North Carolina, have siphoned significant amounts of money dedicated from the 1998 landmark Master Settlement Agreement to their general funds. The largest U.S. tobacco manufacturers agreed to provide at least $206 billion over 25 years to 46 states participating in the settlement. “Any company that is being targeted for a tax will put money behind it to defeat it,” said Beth Miller, a spokeswoman for the Stop the Special Interest committee. The tax could increase net state revenue by $1 billion to $1.4 billion in fiscal 2017-18, according to the California legislature’s nonpartisan fiscal and policy advisor. The adviser acknowledges that the higher tax would lead some smokers to smoke less or quit — another goal of anti-tobacco advocates — thus lowering tax revenue over time.
“Revenue that states receive on each pack sold in the state after a cigarette tax rate increase always significantly outweighs the revenue losses from the decline in total pack sales caused by the rate increase,” the Campaign for Tobacco-Free Kids said in a policy statement. “The companies are fighting these initiatives for one simple reason: They know that a significant increase in the tobacco tax is one of the most effective ways to reduce smoking, especially among kids. The huge sums they are spending against these initiatives represent an investment to preserve the pipeline of kids the industry needs to survive.”
Tax as user fee
John Dinan, a political science professor at Wake Forest University, said studies have shown that spending a lot of money to oppose a ballot proposition or referendum is more effective than spending a lot of money to support passage. In the previous two tax propositions, tobacco manufacturers provided a combined $143 million, while supporters provided $45.4 million. “To effectively kill a measure like this, often the opponents tackle not the main purpose of the measure itself, but pick at some flaw in the measure — whether real or made up — and focus on that,” Daniel Newman, president of MapLight, told Bloomberg News. MapLight is a Berkeley, Calif.-based nonpartisan research organization that tracks money in politics.
The Yeson56 committee emphasizes the tax would work as a user fee and not affect nonsmokers. Dinan said that overall, supporters of tax-increase ballot measures, including for tobacco, “have generally been more successful when these measures dedicate the extra revenue to particular programs, such as education, transportation or health care.”
R Street attached a religious connotation to some Prop 56 supporters, saying “this much is sure — we know two groups will continue to oppose a more reasonable approach toward e-cigarettes, irrespective of evidence about their usefulness in helping people quit a deadly habit.”
“The anti-tobacco warriors (‘Baptists’) oppose smoking and anything that offers smoking-like pleasures to consumers, while the government profiteers (‘bootleggers’) depend on tax revenues to fund their programs.”
ECON 101
Liberal idiots don’t care about public health.
Tobacco taxes fund big government.
Sadly, it will pass in CA where they have never met a tax they haven’t liked.
The state spent all the tax money from the last increase. It was sold as funding for healthcare but was immediately stolen and spent on other pet projects.
No, it won’t.
Everything funds their pet projects. I hear Caltrans doesn’t even fix the roads anymore. Highspeed train. Major pet project to keep Jerry Browns pals employed with 250k jobs a year I am guessing.
If you’re in favor of punitive taxes for health reasons here, are you opposed to punitive taxes on sodas? Candy? Junk food? Fast food?
Where do you personally draw the line, as far as advocating taxation to punish things you don’t like?
I am in favor of NO NEW TAXES period. I favor tax cuts and throwing the tax and spenders out of office.
It is not state governments job to regulate peoples lives through taxes and fees.
Except their referendum on gay marriage. Since that one came out wrong for the liberals, it went off into the ash heap of history.
I bet that will that will drop demand...!!!
I had no idea smoking cigarettes was ILLEGAL. Thanks for clearing that up. All I can say to your comment is 'WTF'.
You do love big government.
Huh?
Decrease demand? or increase black market.
Remember Eric Garner?
Laffer curve.
ECON 101
ECON 101 also says that when people quit smoking, the money to fund all the cool stuff that tobacco taxes used to pay for will have to be found elsewhere. And rest assured it will.
Anyhow, still glad I'm no longer contributing.
Proposition 56 also increases the tax on cigars and pipe tobacco by 145%. It's actually true that men that smoke pipes or cigars actually have a longer life expectancy than non-smokers, as well as being smarter, wealthier, and better looking.
OR they could stop fiddle farting around and outlaw the sale of tobacco products altogether. But they won’t do that because of the loss in revenue.
If I wanted gay marriage to be legal, would it be right to tax those who are against gay marriage for the children’s sake.
What about a tax on ammo?
...a tax on seafood?
...a tax on water?
...a tax on taxes?
When will the do gooders run out of things to tax for the health of the people.
Your premise is an empty argument.
Why not make the tax $5.00 instead?
Because that would kill the tax golden goose.
Wake up idiot!
>
I’m in favor of raising the tax on cigarettes. The iron law of supply and demand says an increase in price will result in a decrease in demand.
ECON 101
>
There’s a 2nd corollary, that will spring, up as well: ‘illegal’ activity\underground (black\grey) market(s).
Total BS!
If reduction in demand were the goal, all tobacco products would be banned.
My decision on this one is thus a no-brainer.
I need not think further, but if I were, I would examine the list of supporters, and question why only 15% of expected revenue is intended to be spent on smoking-related diseses.
A triple no-brainer.
California has been on the creative forefront on ways to separate its citizens from their wallets, for generations, now.
A triple no brainer?
Now let's talk marijuana...
Has no one else noticed the beached whales walking round any large California city? 90% of them on welfare. A double whammy...
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