California voters raise cigarette tax by $2 a pack

 

sjm-tobacco-09xx-021Lost in all the hubbub over this election (and a reason why I waited a week and a half to post about it) was California voters approving a $2 a pack increase in their cigarette tax.

California will go from having one of the lowest cigarette taxes in the country at $0.87 a pack to $2.87 a pack. Big Tobacco spent tens of millions to defeat prior attempts at raising California’s cigarette tax (in fact, a 2012 measure failed literally 49.9 percent to 50.1 percent), but this time it failed.

According to Salon, Big Tobacco spent $71 million to defeat the California measure, which was approved with 63 percent of the vote. California has one of the lowest smoking rates in the country at about 10 percent, so why would Big Tobacco care? Because that’s 10 percent of 38 million people — basically about 3 million adults.

It’s estimated (and studies have backed this up) that raising the cigarette tax by $1 a pack cuts the smoking rate by about 10 percent. So a potential 20 percent cut in those 3 million smokers (that’s 600,000 smokers), each of them no longer spending roughly $1,000 a year on cigarettes? You can see why Big Tobacco cared.

The Salon article claims this measure will cost Big Tobacco $250 million a year in lost sales (at least, that’s roughly a loss of 250,000 smokers). A drop in the bucket for Big Tobacco, but enough to get their attention.

Big Tobacco was able to defeat similar measures in Colorado and North Dakota, where health agencies didn’t have that much to spend against the industry. In California, health agencies spent $36 million to offset the industry’s $71 million.

From the Salon article:

Big Tobacco killed similar tax proposals in Colorado ($1.75 a pack; 46 percent yes) and North Dakota (44 cents; 45 percent) by outspending proponents by a factor of six.

The lesson: You don’t have to spend as much as the tobacco industry, but you need enough money to get your message out.

As an aside, California also approved legalizing pot, as did Nevada, Maine and Massachusetts. The Salon article goes on at length about the danger of Big Tobacco moving into the pot industry, something I’ve written about extensively in the past and don’t need to rehash in this post.

 

Leave a Reply

Your email address will not be published. Required fields are marked *