Good news, bad news on the cigarette tax front. First the good news:
Proponents of raising California’s cigarette tax from 87 cents a pack to $2.87 a pack say they have nearly twice as many signatures as needed to qualify the measure for the November 2016 ballot. They were required to get 545,000 signatures and say they have gathered nearly 1 million.
You might be surprised to know California actually has one of the lowest cigarette taxes in the nation. California has the 36th-highest cigarette tax in the nation and the average state cigarette tax of $1.60 a pack is nearly double California’s tax.
This is partly because even though California has one of the lowest smoking rates in the nation at about 13 percent (I believe Utah is the only state lower), the state represents about 11 percent of the population of the country, so even with a low smoking rate, California represents a huge chunk of the national tobacco market. Big Tobacco spent tens of millions fighting a cigarette tax ballot measures in 2006 and 2012 (a whopping $66 million in 2006 and at least $40 million in 2012). The industry ended up winning in 2012 by the narrowest of margins (literally 50.1 percent to 49.9 percent). Expect Altria and RJ Reynolds to again pour millions into California trying to defeat this measure. If I remember right, that proposed cigarette tax increase in 2012 was only $1 a pack, not two.
And Big Tobacco will fight it, because study after study has shown that an increase in cigarette taxes has a tangible effect of driving down the smoking rate. It simply gives people more motivation to quit and prices a lot of teens out of the cigarette market. California is roughly 10 percent of the cigarette market in the U.S. This freaks out the tobacco industry.
However, California has an ace up its sleeve this time. In addition to public health groups such as the American Heart Association, the American Lung Association and the American Cancer Society, the effort to raise the cigarette tax has some deep pockets of its own to combat Big Tobacco’s spending. Billionaire philanthropist Tom Steyer is helping to bankroll the cigarette tax measure this time around. He’s already chipped in $1 million to fund the petition drive. Several other major groups are spending millions to back the measure.
If the measure passes, it would raise roughly $1 billion a year. That money is specifically earmarked in the ballot measure for MediCal and programs to reduce smoking. Latest polls show 67 percent support for the proposal, but there was a similar level of support in 2012 before the Big Tobacco anti-tax media blitz.
Bad news in Missouri, where a state judge invalidated a ballot measure that would raise Missouri’s dead-last-in-the-nation cigarette tax of 17 cents a pack. The judge ruled that financial estimates of the ballot measure were “insufficient” and “unfair.”
This measure is extremely modest compared to California. Tax increase proponents are proposed a tax increase of only 60 cents a pack — to be phased in over three years — leaving Missouri with a cigarette tax of 77 cents a pack, which would still be one of the lowest in the nation.
From a KSL.com story:
The financial summary prepared by Auditor Nicole Galloway’s office estimates the measure would generate between $263 million and $374 million annually. That largely would go to early childhood education; smaller portions would go to early childhood health programs and anti-smoking programs for youth and pregnant women. The financial summary said the impact to local governments was unknown.
Green struck down the financial summary for two reasons: The estimate on state revenues failed to account for the fact that people may buy fewer cigarettes as the price rises, resulting in an “unreasonably high” revenue projection, and the summary should have noted the potential costs to local governments due to a possible decline in cigarette sales.
The financial summary appeared on the petitions people signed and also would appear on the ballot.
“I collected signatures myself. Nobody really ever asked about that” financial estimate, said Linda Rallo, executive director of Raise Your Hand for Kids. “They are more interested in seeing that we don’t adequately invest in early childhood education. … A lot of folks, too, think our cigarette tax is too low and would like to see that raised.”
An appeal of the decision is planned. A competing measure is being backed by the Missouri Petroleum Marketers & Convenience Store Association. This would only raise the cigarette tax by 23 cents a pack — again gradually — and would raise about $100 million annually.
Missouri is one of the most tobacco-friendly states in the country. In addition to its ridiculously low cigarette tax, Missouri has no statewide smoking ban. It also, not coincidentally, has one of the highest smoking rates in the nation at 20.6 percent (compared to a national rate below 17 percent). Missouri also has the third-highest rate of lung cancer in the country.
The West Virginia State Senate last week approved by a 17-16 vote to increase its cigarette tax by 45 cents a pack. Get this, most of the Republicans voted for the tax increase, while most of the Democrats voted against it. Why? Because the tax increase wasn’t big enough.
Like Missouri, West Virginia has a very low cigarette tax at only 55 cents a pack. Republicans are proposing making it an even $1 to help make up a $270 million budget deficit. The measure would raise an estimated $78 million a year. West Virginia may have to shut down its state government in July if a budget cannot be passed.
Democrats want to raise the tax by $1 a pack to $1.45, which would raise $115 million a year.
The proposed tax increase goes to the State House, where it faces a tough fight from a coalition of Republicans who oppose any tax increase and Democrats who want to see a bigger increase.
West Virginia has the highest smoking rate in the nation at 26.7 percent. Because of the high smoking rate and the coal industry, West Virginia also has the second-highest rate of lung cancer in the country.