Imposes Additional Tax on Cigarettes for Cancer Research
Should the current California excise tax on cigarettes be increased by $1 per pack to fund research on cancer and other tobacco‐related diseases?
California imposes two types of taxes on cigarettes and other tobacco products such as cigars, loose tobacco and snuff: excise tax and sales and use taxes. Currently, excise tax on cigarettes is 87 cents per pack, with an equivalent tax on other types of tobacco products. Sales and use taxes are levied on the final price of tobacco products, including all excise taxes.
The average retail price of a pack of cigarettes in California currently is over $5.
Prop 29 would increase the amount of excise tax on cigarettes by $1, totaling $1.87 per pack, with equivalent excise tax amounts for other tobacco products. Receipts from the excise tax increase would create a new fund, which would provide grants and loans to support cancer research and research facilities for cancer and other tobacco‐related diseases, as well as tobacco control and prevention programs. The fund, administered by a nine‐member committee, would also pay costs of tax collection, increased enforcement of tobacco laws, and administrative expenses.
Estimated revenues from current excise taxes on tobacco products are about $900 million per year, although only 10 cents (or about $90 million) of the excise tax per pack of cigarettes goes to the General Fund. The balance goes to health and wellness programs.
Estimated excise tax revenue in 2012‐13 would increase by an additional $615 million (partial‐year effect) and about $810 million in 2013‐14, to be deposited in the new cancer research trust fund. About $75 million of this would reimburse other health and wellness programs currently receiving tobacco tax revenue, as overall consumption declines.
The Legislative Analyst’s Office estimates that consumers will likely reduce the quantity of tobacco products purchased and change how they acquire tobacco products, such as through Internet purchases or out‐of‐state products.
Savings in health care costs are anticipated due to a likely decrease in the consumption of tobacco products. However, the net fiscal impact is unknown.
- Taxing tobacco products saves lives by getting people to stop smoking. Increasing the cost of tobacco is an effective way to reduce consumption. If you don’t smoke, you don’t pay.
- Prop 29 generates nearly $600 million per year for California’s scientists and research institutions in their search for cures to cancer, heart and lung disease.
- Big Tobacco spends over $1 million an hour on marketing to kids. Prop 29 will help keep California’s kids from starting to smoke.
- Cancer research is important, but California can’t afford a new billion‐dollar spending program when we can’t pay for critically needed existing programs like education and health care.
- Prop 29 does not require any of the new tax revenue to be spent on research in California. Tax money raised FROM Californians should be spent IN California.
- Prop 29 shortchanges California schools by $300 million because it avoids the constitutional requirement that 40% of all new tax revenues go to education.