Cigarette prices could double in California
09/13/05
With tobacco tax dollars dwindling as more California smokers quit, health groups want to pass new taxes that would double the price of a pack of cigarettes to almost $6.
State officials say the numbers tell the story.
California voters passed Proposition 99 in the late 1980s to pay for research, health education against tobacco and healthcare for indigent families.
But statewide revenues from that tax of 25 cents per pack have fallen from $575 million in the early 1990s to $321 million in the current year as the proportion of smoking adults slid to historic lows.
Proposition 10, passed in 1998, funded an early childhood initiative promoted by Hollywood director Rob Reiner. The cigarette tax went up an additional 50 cents when voters approved the proposition.
But the tax that brought in $686 million in 1999 is expected to produce only $593 million this year even as the state Legislature has pushed tougher enforcement against cigarette smuggling, counterfeiting and tax evasion.
It's a decline that promoters are applauding in the sense that the higher taxes may have deterred smoking, but now some advocates are looking to supplement those levies with new taxes on tobacco.
The California Hospital Association plans to put an initiative on the ballot next year that would place a $1.50 tax on each package of cigarettes, most of it for emergency room care. Another organization, the Coalition for a Healthy California, is seeking a tax of $1 a pack for various education, health and enforcement programs. Combined, the two taxes would nearly double the price of a package of cigarettes.
Gary Wilde, CEO of Community Memorial Hospital in Ventura, said California emergency rooms could certainly use the proceeds from new taxes.
"I don't know if it should come out of the hide of smokers, but there really is a need in California hospitals with growing numbers of indigent patients using the ER as their primary source for healthcare," he said.
Jan Emerson, spokeswoman for the California Hospital Association, said the measure would raise $1.4 billion a year on top of the roughly $1 billion that tobacco taxes now generate in California.
"Tobacco-related diseases are a huge burden on hospital ERs: people who have strokes, heart attacks, heart disease, all those come to the ERs and add to the burden," Emerson said. "All of us pay for that. We're trying to create a situation where the people that add to the ER's problems pay for it."
While other habits such as alcohol also contribute to health problems, tobacco taxes are a hit with voters. Emerson said the California Hospital Association has looked at other possibilities, but polling shows cigarette taxes will fly. She noted that an effort to raise money for emergency services with a tax on in-state phone calls failed in 2004.
"We believe this is the measure that has the best chance of success," she said. "There's strong voter support for this."
She said more than $900 million would go to hospitals to cover the costs of operating emergency rooms, with the rest devoted to nursing education, tobacco and breast cancer programs, law enforcement to prevent tobacco smuggling, and administrative costs.
About $100 million would go toward existing tobacco-funded programs that have lost revenues.
Critics say tobacco taxes pass for one simple reason.
"Everybody likes the taxes on somebody else," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.
Smokers compose only about 15 percent of the adult population, according to the state Department of Health Services.
Critics say there's a point of diminishing returns with cigarette taxes. To avoid them, some people buy them elsewhere: from the Internet, through the mail or in other states. The state Board of Equalization says tough enforcement has cut down on such problems.
Still, the agency estimates that $54 million is lost annually to such sources and almost $250 million to counterfeiting.
"Smoking is probably the worst habit in the world," handyman Greg Murphy said as he took a cigarette break Monday at the Ventura County Government Center. "If they made the tax so expensive no one could smoke, they'd probably stop."