Election 2012: Proposition 29 Would Raise Cigarettes Tax

California has not raised its cigarette excise tax since 1998 when voter-approved Proposition 10 bumped the tax up by 50 cents

By Samantha Tata and Conan Nolan
|  Tuesday, Jun 5, 2012  |  Updated 8:43 AM PDT
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Your Guide to Decide: Prop 28

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Your Guide to Decide: Prop 28

This episode of Politically Speaking with Gene Cubbison features perspectives on Prop. 28 from Thad Kousser, political science professor at UC San Diego who supports the measure and Jeff Marston, a political communications consultant and co-founder of the Independent Voter Project.
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California voters will have a chance Tuesday, June 5, to raise the state’s cigarette taxes for the first time in more than a decade with Proposition 29, the race’s marquee issue which would attach a $1 per pack tax on cigarettes and a 73 percent tax increase on cigars.

Campaigns for and against the initiative have been largely defined against monetary lines.

The “No on 29” campaign has been bankrolled by the cigarette industry, which spent upwards of $40 million in opposition to Proposition 29, and has received help from some newspapers which question not the tax, but if the revenue would help the state’s budget crisis.

The underfunded “Yes on 29” campaign, which has support from cancer-survivor and Tour de France champion Lance Armstrong, points out that California trails 32 states in taxing tobacco and that the revenue will boost cancer research in the state.

If approved, the measure would go into effect October 2012 and raise the total state excise tax on cigarettes to $1.87, according to the state’s nonpartisan Legislative Analyst’s Office (LAO).

Prop 29 is expected to raise $735 million annually for cancer research and anti-smoking campaigns, a figure the LAO says will be affected by consumer response and likely decline slightly each year after.

California has not raised its cigarette excise tax since 1998 when voter-approved Proposition 10 bumped the tax up by 50 cents, the revenue from which supported early childhood development programs, according to the state Attorney General.

The tax could push California from well-below to above the national average when it comes to tobacco taxes. In 2011, the average state tax on cigarettes was $1.46 nationwide, according to the Centers for Disease Control (CDC).

Surveys suggest that those voters who cast their ballots by mail weeks ago are more likely to support Prop 29 than those who waited and were exposed to more No on 29 commercials.

“The money that’s being spent, the ads that are being run are all having an impact,” said Sherrby Bebitch Jeffe, NBC4 political analyst.

The measure was polling well until recently, when a field poll found support for Prop 29 had dropped to 53 percent.

David Veneziano, with the American Cancer Society in California, said the initiative would save more than 104,000 lives and prevent 228,000 kids from smoking.

SoCal businessmen, like 54-year-old Anto Kamarian, contend that the tax is oppressive regulation.

“Regulation after regulation, putting us in the corner and keep on squeezing us,” said Kamarian, a Lebanese immigrant who has been in the cigar business for 16 years.

Kamarian said a 73 percent tax hike on cigars would mean a $10 cigar would now go to $14. That same cigar could go for half that much online, Kamarian said, adding that he’s fearful cheaper alternatives will drive business down at his Pasadena shop, Cigars by Chivas.

Revenues from the tax would go into a trust fund that compensates existing tobacco tax programs for any losses due to the new tax and distributes the remaining monies among five funds.

A nine-member Cancer Research Citizen’s Oversight Committee would oversee the trust fund:

  • Four members, three of whom are directors of one of the ten designated cancer centers in California, would be appointed by the governor
  • Two members, at least one of whom has been treated for a tobacco-related illness, would be appointed the director of the Department of Public Health
  • Three members would be chancellors from UC campuses that are members of the California Institute for Quantitative Biosciences Research. UCs Santa Cruz, Berkeley and San Francisco are current members.
     

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