- FAMRI Center
Another ill-conceived tobacco tax initiative emerging in California
According to a story in the Los Angeles Times on March 9 about the recently released initiative to raise the tobacco tax to fund college scholarships, "... the higher-education advocates behind the measure are expected to come under pressure to drop their proposal in the next few weeks from powerful unions and legislators wanting to use a cigarette tax to help pay for an expansion of healthcare in California."
This looks like a repeat of Proposition 86, an initiative to increase the tobacco tax primarily to fund medical services, that lost by 4% in 2006 (a much wider margin than the 0.4% that Prop 29, which would primarily have funded cancer and other medical research, lost by in 2012). While both Props 86 and 29 had money for the state tobacco control program, neither one's primary purpose was to do something about tobacco.
This kind of thinking will not fly with the people any better than Gavin Newsom's proposed initiative to increase tobacco taxes for higher education.
So, what would a tobacco tax initiative that could be passed look like?
Elaborating on what I said in my blog post on the Newsom proposal, a tobacco tax initiative that could pass would look like this:
All the money should go to pay for things related to smoking.
For California, this would mean:
1. Giving first priority to rebuilding the California Tobacco Control Program that the voters created when they saw through a massive campaign by Big Tobacco and passed Proposition 99 in 1988. This program has been an enormous success, cutting smoking in half and saving Californians over $134 billion in medical costs alone. But, because of inflation it is running out of money. The first, and most important use of a tobacco tax should be to fund the program at the level recommended in the 2007 US Centers for Disease Control Best Practices for Tobacco Control. This would amount to about $500 million a year, adjusted for inflation.
2. The second priority should be to see that smoking cessation services are also funded at CDC recommended levels (about $100 million a year). (Given that ObamaCare requires more emphasis on prevention, including smoking cessation, these funds would help pay for an expansion of health care while still being strongly tied to using the money to help smokers and other tobacco users.)
3. The third priority should be to rebuild California’s Tobacco Related Disease Research Program (also created by the voters when they passed Proposition 99).
4. A small amount of money should go for actually collecting the tax (as Prop 99 allows) and to the Attorney General for enforcing California’s efforts to keep Big Tobacco under control as well as “backfill” existing programs (early childhood education and breast cancer research) that are funded by tobacco taxes and will see a drop in revenues because of the increased price of cigarettes.
5. Some of the money (after the priorities above have been met) could also go for medical services to treat people with tobacco-induced disease that the "powerful unions and legislators want;" it just would not be the primary purpose of the initiative. (This is also an element of Proposition 99, although smoking prevention and cessation and research should be the top priorities.)
All this could be done within existing structures that were created when the People of California passed Proposition 99 and which have a successful track record of nearly a quarter century of effective service to the public.
Ideally the California Legislature would enact such a measure. It would be good for the people of California and the California economy by keeping the 80 cents of every dollar spent on cigarettes that now flows out of state to Philip Morris and Reynolds right here in California.
But , while the Legislature is worth a try, it is unlikely to succeed because the Philip Morris and Reynolds are as strong there as ever. Indeed, the Legislature has only enacted 12 cents of California's low 87 cent cigarette tax.
That leaves another initiative. While Philip Morris and Reynolds squeaked out a defeat of Proposition 29 last year (by 0.4%, the narrowest initiative election in California history), past experience shows that a cleaner proposal like the one I am suggesting would be easier to pass and harder for Philip Morris and Reynolds to attack.
Of course, Big Tobacco would fight this proposal too – probably even more violently than the Newsom proposal or one focused on just paying for medical services – because it would not only raise the price, but would rapidly reduce industry sales and profits.
I hope that the people in Sacramento learn from history and get behind a clean proposal that the public can enthusiastically endorse, as they did when they passed Proposition 99 in 1988 with a 58% yes vote in the face of a $42 million campaign against it (in current dollars) by Big Tobacco.