February 28, 2013

Stanton A. Glantz, PhD

Taxing tobacco for higher ed: The wrong way to go

Gavin Newsom, California’s lieutenant governor, has filed an initiative to increase the tobacco tax by $1 with the money devoted to student financial aid for higher education.   This initiative spans two areas in which I have been active for decades: tobacco control and higher education funding. 

My involvement in higher ed financing issues includes years of service on both the UCSF Committee on Academic Planning and Budget and the UC Systemwide Committee on Planning and Budget, including serving as chair of both committees.  I am now a vice president of the UC Council of Faculty Associations, with a focus on budgetary issues and have done an analysis of what it would cost to press the “reset” button on higher ed in California to roll fees back to where they were in 2000, restore state funding to where it was then per student, and open the doors to the thousands of young Californians who have been pushed out of higher ed.  It turns out that it would only cost the median California tax return $48 (i.e., $24 a  person on a joint return) to accomplish this, something that is eminently doable it the political will was there.  (This work was recently discussed in the Chronicle of Higher Education.)   I am also active in the Campaign for the Future of Higher Education, which is working to inject a faculty perspective on these issues.

So I am obviously committed to restoring funding and opportunity to higher education in California.

But the Newsom initiative is the wrong way to do it for three reasons:

First, it is unfair and inappropriate to tax smokers, a small and shrinking fraction of California’s population, to pay for something that has nothing to do with smoking.

Second, while the proposed tax would provide some temporary relief for the huge tuition increases that have been imposed on young people and their families in California to make up for (part of) the cuts in state support, the reality is that this is a declining revenue source so would not fix the problem in the long or even intermediate term.  It could have the effect of creating the appearance of solving the problem of restoring public higher education and make it harder to enact real solutions.

Third, research we have conducted on virtually every tobacco tax initiative ever run (and experience since we published our work) shows that the tobacco companies will use the “fairness” argument above to convince the public to defeat the Newsom initiative.

So I am opposing it and urging all my friends in higher education to do the same.

I do, of course support increasing the tobacco tax. 

It is just that it has to be the right tobacco tax.

And what would a right tobacco tax look like?  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).

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.  (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 Assembly Speaker John Perez has a reputation of being in Big Tobacco’s pocket, Governor Jerry Brown took about $30,000 from Altria and vetoed a bill to make nursing homes smokefree (channeling Philip Morris), and the Democrats are reluctant to use their super-majorities to raise taxes.

So, the Legislature is worth a try, but unlikely to succeed. 

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 – because it would not only raise the price, but would rapidly reduce industry sales and profits. 

But past experience shows that the public will support such a clean tobacco play.  

Anybody want to play?



Posted by Wendy Max
Exposure to secondhand smoke among children is associated with increased risk of attention deficit hyperactivity disorder (ADHD). According to some simple calculations I have done, secondhand smoke exposure among children is responsible for costs to the California education system for ADHD of as much as $1 billion a year.  A tobacco tax that uses the generated revenue for tobacco control  efforts is a win-win situation for both health and education  By helping smokers to quit and reducing smoking and secondhand smoke exposure, such a tax would also reduce the number of children with ADHD. This would result in reduced costs to the education system for special education, counseling, speech therapy, occupational therapy, and physical therapy.
Revenues generated by a tax on tobacco should be used directly to counter the negative effects of smoking. This would indirectly create substantial savings to the educational system as well.

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