Big Tobacco files litigation, raises $17 million to fight California tobacco tax

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Big Tobacco has already filed bullcrap litigation attempting to get a ballot measure removed from the November 2016 ballot that would raise the California cigarette tax by $2 a pack. And on top of that, the industry is planning to spend at least $17 million in order to defeat the measure.

Big Tobacco spent up to $40 million several years ago to defeat a $1 a pack cigarette tax increase. That measure was defeated in 2012 by an incredibly narrow margin —  50.2 percent to 49.8 percent. It lost by 24,000 votes out of 5.1 million votes cast.

Prop  56 would double that increase to $2.87 a pack. Right now, the state cigarette tax is only 87 cents a pack, which surprising to a lot of people, is one of the lowest state cigarette taxes in the U.S. Yup, tax-happy California is actually in the bottom third for cigarette taxes in the country. The $2.87 a pack tax would be one of the highest in the nation. New York has the highest at $4.35 a pack.

First, the industry filed a suit claiming that proponents of the measure have lied that the measure — Proposition 56 — would actually take money away from schools rather than provide a new big revenue stream for education (estimated to be $20 million a year). The industry is claiming that the title of the ballot measure contains inaccurate information and is therefore against the law.

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A hearing was held last week, not much must have happened because I can’t find any news stories about the result of the hearing. According to a letter written to the court by Tom Torlakson, head of Public Instruction for California, the tobacco industry states that “make no mistake, Proposition 56 will not take a dime away from education.” Torlakson calls Big Tobacco’s claims “false and misleading,” “preposterous” and “insulting.”

This LeftofCenter story, not particularly well-written honestly, talks about the measure’s effect on e-cigarettes and how this is one of the reasons Big Tobacco is opposed to it. This is an important point. Prop 56 would not only raise the tax on cigarettes, it would add a tax to vaping products, too. On the Crooks & Liars article about it, some commenters mistakenly state that Big Tobacco is threatened by or competing against the vaping industry. Not really, not as much as a lot of people think. The article is correct that this would hurt Big Tobacco by taxing vaping products. Big Tobacco actually controls 75 percent of the vaping industry. The top three vaping brands on the market are actually owned by RJ Reynolds, British-American Tobacco and Philip Morris. So, yeah, this tax is hitting Big Tobacco in two directions.

Big bucks to fight the tax measure

While this lawsuit apparently didn’t accomplish anything, Big Tobacco has put together a war chest of $17 million to advertise against Prop 56.

From Capitol Public Radio:

Proponents such as Jim Knox of the American Cancer Society’s Cancer Action Network say they’re preparing for an onslaught of opposition.

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“This is classic tobacco industry strategy and deception,” Knox said of the cash infusion. “They will spend tens of millions of dollars to confuse and deceive the voters about the deadly nature of their product, as they have been doing for decades.”

 

Expect the industry to hide behind a bunch of Libertarian anti-tax “choice” bullshit in its advertising. That’s Big Tobacco’s MO.

From the story:

Beth Miller, a spokeswoman for No on Prop 56, says her campaign wants to educate voters about the problems it sees with the cigarette tax. She said it sidesteps requirements that money from new taxes fund schools.

“The proponents claim the tax increase will help people quit smoking. But it really is a tax hike grab by the insurance companies and other wealthy special interests,” Miller said.

The good news is Prop 56 backers have raised $16.6 million themselves to promote the measure.

Polls show roughly two-thirds support for the proposed tax increase. However, the 2012 measure also had strong public support until the tobacco industry spent millions to defeat it.

Prop 56 and marijuana measure
expected to raise $2 billion

One of the arguments in favour of the proposed tax is that it along with a measure to legalize marijuana, would raise $2 billion annually for the state of California.

Currently, California brings in $800 million in tobacco taxes. A state agency has estimated that Prop 56 would generate another $1 billion to $1.4 billion a year for state coffers. While the tax would triple, the revenue would roughly double. That makes sense, because such a huge tax increase would likely drive down the smoking rate.

Additionally, the state is estimating another roughly $1 billion a year in tax revenue from legalizing marijuana. That’s based on revenue increases seen in Colorado and Washington from their marijuana measures (I suspect pot hasn’t been legal in Oregon long enough to get a lot of revenue information).

 

 

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