Everyone knows that tobacco kills, but still, the numbers are staggering. In California alone, some 40,000 adults die each year as a result of smoking or secondhand smoke, and the amount spent annually on healthcare directly related to tobacco exceeds $13 billion. Nationally, the death toll is 480,000.
Americans, for better or worse, have decided that this nasty, lethal drug should remain legal. So government’s approach is to discourage smoking where it can. It restricts advertising, requires warnings on cigarette packs, bars sales to minors — and, most effectively, it levies “sin taxes” designed to make smoking prohibitively expensive.
In New York, for instance, the state excise tax on a single pack of cigarettes is a whopping $4.35; in Connecticut it’s $3.90; in Hawaii it’s $3.20.
But in California, thanks mostly to the tobacco lobby, the excise tax is just 87 cents per pack — one of the lowest state cigarette taxes in the nation, lower than all the states that border California. In the Legislature, 35 attempts to increase the tax have failed to win passage over 34 years; the last increase was approved at the ballot 18 years ago.
That’s too bad because tobacco taxes are really a brilliant and beautiful thing: They not only bring in revenue for government but also serve a social good in the process. On average, peer-reviewed studies have shown, a 10% increase in the total price of cigarettes will yield a 3% to 4% reduction in adult consumption — and a 7% reduction among young smokers.
It’s well past time for a hefty increase in California’s tobacco excise tax, and a yes vote on this year’s Proposition 56 could help make that happen. Proposition 56 would add $2 per pack to the existing state levy (which in turn would be added to the federal excise tax, to sales taxes and to the retail cost). It would make California’s tax the 9th-highest in the country, up from 37th. An equivalent tax also would be applied to other tobacco products and to e-cigarettes.
While bringing down smoking rates, the tax also would bring in between $1 billion and $1.4 billion in its first full year — 2017-18 — after which, the revenue would decline slowly as the number of smokers shrinks. Some of the money would go to administration and enforcement of the tax itself; a sizable chunk would go to tobacco prevention and control programs; a portion would go toward research on cancer, heart and lung disease and other tobacco-related diseases. But the bulk of the funds would go to Medi-Cal, the state’s health insurance program for low-income residents — specifically, to pay healthcare providers more to treat Medi-Cal patients.
That would be great news for Medi-Cal, whose reimbursement rates are currently 49th in the nation — so low that they discourage doctors and hospitals from accepting the low-income patients who are served by it. As a result, many poor people are forced to get their healthcare not in doctors’ offices but in emergency rooms after they become much sicker. There, the care is free for patients — but far more expensive for the taxpayers who ultimately foot the bill. That situation has to change, and Proposition 56 would help.
Of course, there are arguments against the initiative as well.
For one thing, there’s the perennial complaint that tobacco taxes are regressive, meaning that they fall disproportionately hard on the people least able to pay. That’s true because poor Californians smoke more than wealthier ones and because the tax is one-size-fits-all, regardless of income. But that is offset by the fact that the smokers themselves ultimately will be helped by the tax if it prompts them to kick the habit.
Another concern is that it’s generally not good policy for voters to impose a tax on a specific, targeted group of citizens and then dedicate that money to a particular use that doesn’t directly benefit those citizens. Either the money should go in the state’s general fund for general purposes, or it should be spent directly on behalf of the group paying the tax. The Times editorial board has opposed some previous cigarette tax proposals because of the way the revenue would have been spent.
In this case, some of the revenue would be dedicated to anti-smoking programs, but the bulk would go to healthcare for the poor. Nevertheless, the benefits of bringing down smoking and raising Medi-Cal’s disastrously low provider rates outweigh the disadvantages of ballot-box budgeting.
Here’s another issue: There’s some dispute over whether e-cigarettes should have been included in the tax. The science on e-cigarettes is still new and developing and, frankly, it’s not entirely clear yet how dangerous they are. Some believe they serve as a gateway to cigarette smoking for children, but others argue that e-cigarettes are, in fact, a good tool to help smokers quit.
There’s more to learn. But it is reassuring that, under the proposition, if the U.S. Food and Drug Administration deems e-cigarettes in the future to be a legitimate “cessation device,” they automatically would be exempted from the tax at that point.
Finally, there’s some concern that Medi-Cal is committing itself to higher provider rates in perpetuity — paid for by revenues that are expected to decline over the years. That’s a potential problem, but it’s not a reason to reject the increase. The fact is, provider rates need to come up. Medi-Cal officials should plan carefully and be prudent in using the diminishing tobacco tax revenue. In any case, the revenue is expected to decline only about 3% a year; hundreds of millions of dollars a year will still be available for many decades to come.
The battle to pass Proposition 56 will be tough, as always, because of the power of the tobacco lobby, which already is making deceptive claims like this one: “Prop 56 cheats schools out of at least $600 million per year.” That’s baloney. Proposition 56 wouldn’t take a penny from schools; it would merely exempt the new tobacco tax revenue from the requirements of Proposition 98, the 1988 measure which guarantees public schools a large share of the state’s core revenues. Many initiatives include such an exemption.
Don’t believe the cynical, disingenuous opponents of this measure. Proposition 56 will save lives. The Times urges a yes vote.