A tax on tobacco products is a good unto itself, not just a way to raise revenue. As economists have repeatedly reported, tobacco levies are highly effective at dissuading people from smoking cigarettes, which remains the leading cause of preventable death in the United States. Tobacco taxes alleviate suffering and extend lives. What's not to love?
That said, it's important that the money raised by such sin taxes be spent appropriately. Proposition 29, which was on the California ballot in 2012, failed that test. Its revenue would have funded a new quasi-governmental agency to conduct research on a wide range of diseases. The state didn't need a new agency that would spend taxpayer money without being answerable to taxpayers. And there were no guarantees the funds would be spent within the state.
Voters rejected the initiative, leaving California with one of the lowest state cigarette taxes in the nation, at 87 cents per pack. Even Montana, which is Marlboro Country, charges about twice as much.
Assemblyman Richard Pan (D-Sacramento) would like to change that with a bill that would raise the levy $2 per pack, generating about $1.5 billion annually in the early years. (As smoking rates drop, so would the taxes collected.) SB 591, which would require the approval of two-thirds of both houses of the Legislature, would spend the new revenue in ways that largely benefit the people who pay the tax: Close to $1 billion would go to Medi-Cal to pay for low-income patients who suffer from smoking-related illnesses. Most of the rest would be divided among the University of California's existing Tobacco-Related Disease Research Program, smoking-prevention programs and access to help with quitting the habit.
The wording in the bill is vague and still evolving; Pan must make sure that his legislation fulfills its intent and is not hijacked by special interests seeking their own piece of the revenue.
There is one other problem with the bill. On its own, it would not tax e-cigarettes, but if another piece of legislation succeeds in redefining the devices as tobacco products, the tax would extend to them. That seems premature at best; the verdict on e-cigarettes, which dispense nicotine-laced vapor instead of tar-riddled smoke, is not yet clear. They might be a helpful way for people to drop a smoking habit, or an unhealthful way to lure young people into an addiction. The state should wait for scientific consensus before imposing steep taxes on them.
California taxpayers shell out about $3 billion a year for treatment of smoking-related illness. SB 591 represents a sane approach to reducing the ravages of smoking and paying for some of the injury it incurs.