With California now having one of the nation’s lowest tax rates on cigarettes, the state is long overdue for a raise. Proposition 56 on the November ballot proposes to add a $2 state tax to buying a pack of cigarettes. The rate would be somewhat higher for other tobacco products. And for the first time, the tax would apply in California to e-cigarettes.
Even with the raise, which will bring the per pack state levy to $2.87, California’s tax will be dwarfed by New York’s $4.35 per pack state tax, which climbs much higher in some parts of that state when local taxes are added. The proposed increase will put California on par with such states as Washington, Wisconsin and Minnesota, and still below others. And many states already apply a tax to e-cigarettes.
According to the legislative analyst, the average retail price of a pack of cigarettes in California now is about $6. This price includes the existing 87-cent state tax and $1.01 a pack federal excise tax. In addition, a state sales tax is applied. With the passage of Prop. 56, the average cost of a pack of cigarettes will increase to above $8.
Proceeds from the state tax on cigarettes and other tobacco products goes to state and local government agencies to support programs that administer and enforce tobacco laws; conduct research; provide medical training and treatment; and discourage smoking.
Money is pouring in for this ballot battle. A report this summer noted proponents, including the American Cancer Society, the American Heart Association and billionaire Tom Steyer, had raised $13 million. Opponents, who are primarily tobacco companies, contributed about $36 million to defeat the measure.
Proponents argue that the higher tax will discourage tobacco use and provide money to treat tobacco-related diseases. Opponents contend the tax will encourage illegal black market sales and particularly disadvantage poor people, who will end up spending more money on cigarettes and less on necessities. They also dispute the contention that a tax and higher price discourage use. Tobacco companies used these same arguments to unsuccessfully campaign against earlier ballot measures that placed small state levies on cigarette products years ago.
But their arguments are not supported by the numbers. According to the California Department of Public Health, even with California’s rather small cigarette tax rate, the state has achieved the lowest adult smoking rate in the country. And the rate has been falling – from 24 percent of California adults being smokers in 1988 to 12 percent in 2013.
Earlier state tax hikes on cigarettes should get some credit for the decrease. In addition to raising the per pack price, the tax proceeds have funded years-long aggressive smoking cessation programs and anti-smoking campaigns. Also accounting for the decrease is the passage of strong state laws banning smoking in public buildings, work places, restaurants, etc.
But there lies the problem. The present anti-smoking efforts and the tax money to support them are victims of their own success. As the number of smokers declines, so does the volume of cigarettes sold and the amount of taxes collected.
Without an infusion of cash, California’s anti-smoking efforts and treatment may plateau, or even worse reverse.
Californians should vote YES on Prop. 56 to maintain and expand the state’s anti-smoking and treatment programs.