By Tom Cushing
Prop 56: Tax ‘em if you smoke ‘emUploaded: Oct 16, 2016
Proposition 56 would raise the state excise tax on tobacco products by $2.00/pack of cigarettes or its equivalent, and include e-cigarettes in the measure. California’s current tax rate is 87 cents/pack, among the lowest in the nation, where $1.65 is the average state levy.
The short-form Prop reads as follows:
(Prop 56) “Increases cigarette tax by $2.00 per pack, with equivalent increase on other tobacco products and electronic cigarettes containing nicotine. Fiscal Impact: Additional net state revenue of $1 billion to $1.4 billion in 2017-18, with potentially lower revenues in future years. Revenues would be used primarily to augment spending on health care for low-income Californians.”
The distribution formula beefs-up declining revenues of the current tax, which are earmarked mostly for early childhood development programs and smoking prevention (together, 75%). It then transfers the bulk of the remainder to MediCal services, as well as anti-tobacco law enforcement.
This is another exceptionally well-funded debate, with some $79 million raised, and allocated more than 2-1 in opposition to the measure. Major Yes funders include CA hospitals, doctors and dentists via their professional associations, the Service Employees Union and tech mogul Tom Steyer, whom brother blogger Tim calls a ‘radical environmentalist’ (really, Tim?). Opposition money comes almost exclusively from tobacco companies and their affiliates. CA Dems and most newspapers support the measure; the state GOP and the Orange County Register oppose it.
Supporters argue that this is a straight-forward use of market principles to fight the scourge of a primary health menace. It’s Econ 101 stuff -- price goes up and smoking goes down. The revenue, they say, is also put to good current uses -- and as smokers bear a larger share of the total MediCal expense, the rest of us pay less of it.
Opponents have chosen to paint Prop 56 as a draconian measure – we should be “helping” our smokers to quit (that’s some very strange bedfellowage for the state GOP – rejecting a market approach in favor of ‘help’ from Big Government, but I digress). They also hang an unspecified “wealthy special interests” label on the recipients of revenue from the Proposition. Further, they say that e-cigs aren’t so bad. Finally, they argue that the measure “shortchanges schools,” since the money doesn’t go to education (they might have also noted that it Fails to stop ISIS).
For my money (actually it’s not my money), the ayes have it here. There is some legitimate concern when a majority imposes special levies on a minor fraction of the population. It’s also true that so-called ‘sin taxes’ can be a slippery slope, said the guy who enjoys an occasional scotch-and-soda. Those are the two best actual policy arguments available to the No campaign.
That said, smoking is a uniquely foul pastime – worse than any other legal product in terms of both its general addictive potential, and its unavoidable, direct and dreadful impact on unwilling non-participants. There’s just nothing else like it. Thus, the use of tax policy to discourage it, and bring California up from the lower ranks of state taxers seems legitimate to me. There’s not much of a slope here, and it’s firm footing. Finally, there is good evidence that e-cigs are a gateway, and there are alternative vehicles (like patches) for nicotine delivery.
We all pay for smoking, whether we partake or not. Here’s a case where ‘less’ of it really is ‘more’ beneficial to Californians. I’ll vote Yes on 56.