Posted on 08/07/2006 3:02:26 PM PDT by calcowgirl
Come November, Californians will be asked to impose the biggest tax increase ever on tobacco products, a change that healthcare advocates believe will reduce cigarette consumption, but some officials think will increase cigarette smuggling.
The organizations supporting Proposition 86 — the American Cancer Society, American Heart Association and a consortium of healthcare advocates — say the higher taxes will reduce smoking, and research from the California Department of Health Services backs them up.
According to the department, California's adult smoking rate has dropped 38 percent since 1988, when taxes were raised 25 cents on tobacco products. As a result, lung cancer in California is decreasing at a rate that's four times more than the rest of the country.
If approved, the proposition would increase taxes on cigarettes by 300 percent, making the tax the highest in the nation. Proposition 86 would add $2.60 to the 87 cents in taxes already being paid on a pack of cigarettes, bringing the total tax to $3.47.
The bulk of that new revenue would go to keeping emergency rooms running, providing health insurance for uninsured children and medical research.
Critics of the measure say those revenues dry up as people stop smoking, leaving behind the new programs.
"You're creating a new bureaucracy," said Fred McConnell, spokesman for R.J. Reynolds Tobacco Co. "So then where does the money come from? Down the road, you'll have to create new taxes."
Another concern is that higher tobacco taxes could lead to crime. Federal investigators say that illegal trafficking from lower-tax states to higher-tax ones is part of the multibillion-dollar enterprise in cigarette trafficking.
According to a 2004 report from the U.S. General Accounting Office, "cigarette smuggling results in lost tax revenues, undermines government health policy objectives, can attract sophisticated and organized criminal groups, and could be a source of funding for terrorists."
Another barrier to collecting taxes on cigarettes is the Internet. Web sites illegally sell tobacco products without collecting state taxes, enticing buyers with lower prices and reducing tax revenue to the state.
Proponents of Proposition 86 say competition from Internet sales has not been shown to be a problem.
"We're not grossly concerned, because there really isn't any report, data or valid research showing a link with cost to interstate smuggling," said Maria Robles, spokeswoman for Yes on Proposition 86.
Robles also noted that Proposition 86 would allocate $18.3 million toward tobacco control systems within the state, which should help combat criminal activity.
Stamps show tax paid
In California, each pack of cigarettes is stamped, serving as evidence that sales tax was paid. Distributors must have special printing presses to put the stamp on each pack, and retailers are required to purchase cigarettes only from licensed distributors.
Since Jan. 1, 2005, California is using a new high-tech, encrypted stamping system that is supposed to be difficult to re-create.
"We have an effective state licensing program that has been proven to show that they can avert the smuggling and tax evasion issue," said Paul Knepprath, spokesman for the American Lung Association of California.
However, Bill Leonard, who sits on the state Board of Equalization, the agency that oversees tax sales, was doubtful that the system would remain foolproof.
"I assume they have resources to use the special inks we use on our tobacco stamps," he said.
Leonard said that staying ahead of criminal activity is a difficult task and that the Legislature has been made aware of that.
"We're very concerned," he said.
Retailers concerned
Tobacco retailers also are concerned about the effect that higher taxes will have on their small businesses.
"You simply cannot expect small business to survive in an environment that creates a punitive tax on legal products," said Charles Janigian, president of the California Association of Retail Tobacconists, a nonprofit trade organization representing small, independent businesses.
One such business owner, Vic Akundzadeh, said such a huge tax increase would leave him with no choice but to close his Ventura shop, Smoker's Castle.
"If the law passes, mention that Vic is looking for a job," he said.
He's already struggling with competition from Internet sales.
Customers routinely tell him that they'd love to buy his cigars but they have cheaper sources.
"You know how it is; I buy out of state," he said they tell him.
Between puffs at Vic's, Bob Gregorchuk called another tax hike "a form of Prohibition."
Proposition supporters say putting a few retailers out of business is a small price to pay for keeping kids from starting the smoking habit.
"I want to save my kids above and beyond the tobacco shop down the street," Robles said. "It's about priorities."
Knepprath agrees.
"Those who talk about prohibition aren't looking at the facts," he said.
"Proposition supporters say putting a few retailers out of business is a small price to pay for keeping kids from starting the smoking habit."
It's for the chiiiiiiiildrrrrrren.
Lets hear it for cigarette smuggling. Hip hip hooray! Hip hip hooray! Hip hip hooray!
One more ugly sucker to vote against.
A worthwhile measure to see on the ballot and vote for, would be the requirement that all future bond measures must pass by 75%.
Here, here! I'd vote for that.
How about ALL initiatives needing 75%?
The current process is out of control!
I doubt smokers utilize emergency rooms more than any other segment of the population. But who does utilize emergency rooms? Illegal aliens. This is nothing more than a way to get citizens to subsidize the health care of illegals.
As I see it, the special interest groups have decided to go all out with regard to abusing the proposition process.
There should be a law that would prevent people from bringing essentially the same measure up ballot after ballot after ballot until the terrible thing finally passes.
They said there's been no studies done to confirm if internet sales cut into cigarette tax revenue?
Seems like common sense to me. You don't need a study to predict that will happen. The higher the tax, the more profit motive there is for someone to work with black market cigaretts.
Look for the price of gasoline to increase since small gasoline retailers generally make more selling cigarettes then they do gasoline, they will have to pass their losses onto someone.
There was the United States v. Elias Mohamad Akhdar et al case a few years back (cigarette-smuggling ring that turned over the profits to Hizbollah).
ping
Like where, over the years,all the previous smoker tax increases and the tobacco settlement monie$ were suppose to go...
....only to wind up in the CA General Fund and into the pols pet project pockets.
It's a shame that more smokers, seemingly, don't vote. I fully expect it (Prop 86) to pass in the "Yea! Let's stick it to those dizzgusting smokers again!" mentality that seems to prevail.
I'm also fairly close to several other state borders. :)
~GCR~
>There should be a law that would prevent people from bringing essentially the same measure up ballot after ballot after ballot until the terrible thing finally passes.<
You mean like the sales tax Oregon has brought up at least four times in recent history only to be voted down by the people each time? Oregon, especially Multnomah County, already "enjoys" extremely high property taxes (to home owners, not to big business), and a 15% income tax!
15%? Wow!
Sounds like time for a citizens revolt. Sadly, most folks are too busy working to turn their full attention to the state house for long.
Hey, if its so bad and kills (anyone, who even inhales minuscule amounts of second had smoke according to our SPURGEON GENERAL) and is harmful to the rug rats, then, why not simply make it ILLEGAL?
PROBLEM SOLVED.
ALL of the avaricious, slime bucket politicians (and their enabling, pond-sucking, bottom-feeding, ambulance chasers) who reaped BILLIONS in the tobacco suit settlement, have taken the money and simply applied it (all, or almost all) to their states' general revenues. Can anyone expect 2/3 of the population who do not smoke to have any pity of those of us who do?
These nany-state doo-doo gooders, want it both ways; they want the revenue from the taxes while espousing a proclamation that increased taxes will decrease consumption.
I guess few--if any--of these "rocket scientists" know anything about economics and the case for "diminishing returns."
Certainly, some will quit as a result of increased "tariffs," but then how does the states maintain the same (or increased) amounts of revenues from a smaller number of tobacco product users?
Simple for these eggheads: Raise the taxes even higher--over and over and over.
Ah, but sooner or later (if one accepts their flawed premise) there will be very few--if any--smokers as the cost will become prohibitive.
Then what? Oh yeah, all you non-smokers, GUESS WHAT?
Has ANYONE EVER seen a guvmint-funded, social program reduced--much less, eliminated--rhetorically, I ask?
So, if the doo-doo gooders, have not begun (AND MARK MY WORD, IT's COMING) taxing Big Macs, Fries, Big Gulps, Twinkies and Krispy Cremes, then it will left to the general population to make up for the lost revenues from all of us smokers who will have cut back, quit or found other outlets to purchase our products.
Here ya go, folks. The real reason they are hugely increasing the tax is to pay for the healthcare illegals are getting in CA.
Government paid healthcare is a reality. But instead of sending the bill to Mexico, Americans are paying it.
Not yet.
Oh, wonderful:fund the illegal aliens use of the emergency rooms (by these criminals) for "free" routine medical care.
"We're gonna tax the crap out of 'em".....
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.