Smoking Out New Tax Money : City Wants Smokers to Cough Up 10% More for Pack of Cigarettes

Four nonsmoking San Diego City Council members hatched a plan Wednesday to bum $11 million a year off cigarette smokers.

The issue, couched in more formal terms, will be considered Monday by the full City Council, along with a hopperful of other ballot issues proposed for the Nov. 3 general election.

A proposed citywide 10% tax on tobacco sales would yield $11 million annually, according to city financial analyst Patricia Frazier, but it would cause the city to lose $3 million a year in state-collected cigarette taxes now sent to city coffers.

The idea was born during a joint meeting of the City Council and county Board of Supervisors last month to find ways of raising funds to build more jails, Dave Nielson of the city manager’s office said. Councilwoman Abbe Wolfsheimer, a smoker, came up with the proposal for local “sin taxes” on tobacco and liquor as lucrative new sources of revenue.

Two-Thirds Approval Needed

Under state law, cities can’t tax liquor, Frazier said, but they can tax tobacco products. However, there is a catch. A city cigarette tax would be classified as a “special tax,” which requires a two-thirds vote of approval by the public.

Undaunted by the prospect of a tough campaign for the tax, Councilman Mike Gotch proposed a 100% levy on cigarettes “to fund police, libraries and parks.” A 100% tax, which would raise the average $1.10 price of a pack of cigarettes to $2.20, could yield the city $100 million or more a year.

Councilman Bill Cleator sided with Gotch’s 100% tax proposal, or “anything to discourage people from buying cigarettes.” The money coming to the city, he said, could be used to buy more sculpture for the downtown waterfront or to resurrect the San Diego Symphony Orchestra, Cleator said, tongue in cheek.

Chief Deputy City Atty. Jack Katz tossed a sobering thought into the council Rules Committee discussion: If the city imposed too stiff a tax on cigarettes, smokers would just buy their cigarettes in National City or Chula Vista.

Gotch later scaled down his pipe dream and proposed a 10% tobacco tax levy, which he said would bring in enough money to “buy all the (coastal) wetlands between here and Tijuana.”

Mayor O’Connor Warms to Idea

Mayor Maureen O’Connor was lukewarm at first to the idea of a sin tax, but warmed up at the thought that a cigarette tax would act as a deterrent to smokers and would raise a nice piece of change for the city.

When the committee members quit blowing smoke and began to consider the idea seriously, a 10% tax--”just a half-cent a cigarette,” O’Connor noted--was decided upon as reasonable but not greedy. The money, committee members agreed, would best be used for parks and open space.

Time constraints probably prevent the city from seeking a countywide cigarette tax, Nielson said. Ballot issues for the Nov. 3 election must be approved and submitted by next week.

Even if 67% of San Diego voters approve the tax, another hurdle stands in the way, Frazier advised. Voters also would have to approve a November ballot measure raising the city’s municipal spending limit, imposed four years ago with statewide passage of the Gann Initiative. Otherwise, the city might take in additional millions of dollars but be prevented from using the funds.