California Cigarette Tax Battle Attracts Money & Attention From Big Tobacco, Bloomberg & Armstrong

If New York City Mayor Bloomberg gets his way, it will soon be a lot more expensive to light up in California. Yes, that Mayor Bloomberg, the same one that proposed a ban on sugary sodas this week. And yes, that California, three thousand miles away from New York City.

On Tuesday, California voters will weigh in on Proposition 29, an initiative to increase the tax on cigarettes and other tobacco products. If it passes, smokers in the Golden State will pay an additional $1 per pack in tax on cigarettes.

It’s too early to tell if the measure will pass: the state is apparently split on the measure. Big Tobacco has pumped tens of millions of dollars into efforts to kill Proposition 29, triggering many around the country to chip in to support it. Among them is Bloomberg, who has reportedly donated $500,000 to the fight to make Proposition 29 law.

Remarkably, the revenue raised from Proposition 29, estimated to be $735 million annually, would be used to fund cancer prevention and research initiatives, including:

(1) Grants and loans for biomedical, epidemiological, behavioral, health services, and other research in California to enhance the state of medical knowledge regarding lung cancer and other types of cancer, cardiovascular disease, emphysema, and other tobacco-related illnesses.
(2) Creation, staffing, and equipping of California research facilities engaged in biomedical, epidemiological, behavioral, health services, and other research whose primary focus is to identify and refine promising prevention, early detection, treatments, complementary treatments, and potential cures of lung cancer and other types of cancer, cardiovascular disease, emphysema, and other tobacco-related diseases.
(3) Increased efforts to reduce tobacco use in the state and prevent children from becoming addicted users.

(You can read the entire proposed act here – downloads as a pdf.)

I say “remarkably” because sin taxes like this one are often used to fund projects which are unrelated to the actual behavior the tax alleges to address. And with California’s current budget woes, it wouldn’t be completely off the wall to see a proposal like this one used to channel revenue into the General Fund. Proposition 29, however, indicates that the tax increase is an “appropriate way to fund efforts to prevent and reduce tobacco-caused cancers and other diseases because increasing tobacco product prices directly reduces smoking and other tobacco uses.”

Big Tobacco has been fighting back, however, claiming that an increase in tax is merely an increase in the already high burden on taxpayers. Further, they claim, this is just another example of big government in California: more regulation, more bureaucracy.

California is an interesting state for this kind of public battle since, statistically, most Californians simply don’t light up. According to the Center for Disease Control (CDC), 14.0% of the adult population — over 3,839,000 individuals — are smokers. This puts the state well below West Virginia, where nearly twice that percentage smokes – and just ahead of Utah for the race to the bottom. In other words, California is 2nd among the states in terms of non-smokers.

So why the spotlight? For one, California is huge. The Census Bureau puts the state’s population at nearly 40 million – more than 10% of the entire U.S. population. By the numbers, the state is one of the largest markets for cigarettes in the country.

California is also seen as an influential state when it comes to tax policy (*cough*). The fear is that as California goes, so will the nation. Currently, California charges $0.87 in tax per pack of cigarettes, landing it near the bottom in terms of tobacco taxes (it ranks 33rd). An additional $1 per pack would push it closer to the top, only behind Alaska, Arizona, Connecticut, DC, Hawaii, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, Rhode Island, Vermont, Washington and Wisconsin – also Guam and Puerto Rico, if you’re counting territories. You can see where your state ranks here (downloads as a pdf).

Interestingly, unlike many other states (including my current home state of Pennsylvania), there is no minimum price law in California. That means that a $1 increase in tax will not necessarily translate into a straight $1 increase at the counter.

The focus on the state has attracted the attention of more than just Bloomberg. Other famous names have joined the fray, including international bike star Lance Armstrong, who has previously battled cancer. Armstrong has lit up Twitter with his support for the measure; he has more than 3.5 million followers on site, including Bloomberg, who tweeted his alliance.

Armstrong even stars in a pro-Proposition 29 ad:

Despite the big name support, those in support of Proposition 29 have only raised about a quarter of the money that Big Tobacco has thrown into defeating the measure. It’s kind of impressive that the vote still stands about even with that kind of lopsided funding. So that does mean that the money means something? It sure looks like it. With tens of millions of dollars in the campaigns for and against the measure, the vote has attracted national attention.

For the record, I don’t smoke. I have a million reasons but tops of the list: I watched my grandmother gasp her last breath in her losing battle with breast and lung cancer. My mom had more luck: she is a cancer survivor. My experiences taught me an important lesson: cancer sucks. It’s a horrible way to live and an even more horrible, terrible way die. And while neither my grandmother nor my mom smoked cigarettes, I know that smoking increases the risk of cancer. It’s not worth it to me.

That’s my choice and while I hope it’s yours, too, it’s not my choice to make for you.

But that’s the great thing about voting: you get to make a choice that affects other people. So, California, know that the country is watching as you go to the polls on Tuesday. What’s it going to be?

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