3 Groups Launch Separate Efforts to Raise Cigarette Tax

By HUGO MARTIN

Oct. 17, 1997 12 AM PT

TIMES STAFF WRITER

While lawmakers in Washington debate a giant tobacco deal that could substantially increase cigarette prices nationwide, three powerful and well-financed groups in Los Angeles are launching separate initiatives that could add $1.50 in taxes on each pack in California.

The new tax would be tacked on to the 37-cent levy charged by the state, giving California the highest cigarette tax in the nation.

The initiatives--one led by actor-director Rob Reiner, another by Assemblyman Bob Hertzberg (D-Sherman Oaks), and the third by a group of public health agencies--are designed to raise millions of dollars to fund after-school programs, prenatal care classes and health care for low-income children. Each calls for a 50-cent tax increase.

But the initiatives face formidable obstacles. The proponents can expect to face strong opposition from the tobacco industry, which is willing to spend millions to defeat their efforts.

And backers of the three efforts admit that they are in competition with one another because they are vying for the same funding source.

Finally, proponents worry that if all three campaigns succeed, the higher cigarette prices will prompt some smokers to quit, thus reducing tax revenues for the programs they are intended to benefit.

The initiatives have been launched to take advantage of a strong anti-tobacco sentiment in the public fueled by charges that tobacco firms have suppressed information about the health hazards of their products and manipulated the nicotine levels in cigarettes in order to hook smokers.

“Polling data has shown that there is a huge public appetite for beating up on tobacco companies,” said former Assemblyman Richard Katz, who is backing the initiative led by the American Lung Assn., the American Cancer Society and the American Heart Assn.

The tax supporters are relying on the initiative campaign because two recent bills that called for a cigarette tax increase failed in Sacramento, demonstrating the tobacco industry’s strong influence over legislators in the state capital.

Individually, each of the three 50-cent tax increases would raise up to $800 million a year, according to initiative supporters. But their surveys also show that each 50-cent increase could reduce sales as much as 15%.

Further, cigarette prices would increase 62 cents to $1.50 a pack if the federal government approves a tobacco litigation deal that would force cigarette makers to pay for the treatment of tobacco-related diseases. That would probably reduce cigarette sales even more.

“If they all qualify--and qualification is a difficult process--the concern about lower revenues may set in,” said Mike Roos, the head of a school reform movement who is also working with Reiner on one of the initiatives.

The initiative backed by Reiner would pay for early childhood development programs. Reiner, who has become politically active in recent years, has put up $50,000 toward qualifying the measure for the November 1998 ballot.

The initiative headed by the health groups and backed by Katz would help pay for health care programs for low-income children. Supporters also hope to put it on the November 1998 ballot.

The third initiative, led by Hertzberg and Los Angeles Recreation and Parks Commissioner Steve Soboroff, would fund after-school programs to help keep children out of gangs.

Hertzberg hopes to get it on the June 1998 ballot.

The campaign for Hertzberg’s initiative is the furthest along, having collected more than 200,000 signatures of the 467,000 needed by December. The other two initiative campaigns are only now beginning to collect signatures.

Initially, Katz tried to convince Hertzberg to combine their efforts behind one 50-cent cigarette tax initiative. But that alliance failed, and since then all three camps have proceeded independently, hoping that whatever happens, they will each still get a healthy revenue flow.

Katz said he tried to team up with Hertzberg because he fears that the public may be reluctant to add three separate taxes on cigarettes in one year, despite the anti-tobacco sentiment.

“I think there is a sense of competition since we all are going for the same dollar,” Katz said. “All the groups have good intentions, but you have to wonder whether there is a point where the public will say, ‘Enough on beating up on the tobacco companies.’ ”

But others say a reduction in cigarette sales would be welcome news--even if it means less revenue for the programs.

“That would be a double winner, because we would be reducing cigarette consumption and still raising money for after-school programs,” Hertzberg said.

Tobacco firms say they have yet to devise a plan of attack against the three initiatives. But it is clear that they are not going to sit idly by.

“We think smokers are already overtaxed and obviously there are several groups out there that would like to attack smokers to benefit there own pet causes,” said Brendan McCormick, a spokesman for Philip Morris USA, the largest cigarette manufacturer in the world.

He noted that California already collects about $640 million annually in taxes from cigarettes. The state charges 25 cents to fund the Department of Health Services. An additional 2 cents goes to fight breast cancer, and the remaining 10 cents goes into the state’s general fund.

The federal government also tacks on a 24-cent tax.

“We think enough is enough,” McCormick said.

He also says that the higher tax may promote smuggling from adjacent states and Mexico, where taxes on cigarettes are much lower--a fear that tax proponents say is exaggerated.

Peggy Carter, a spokeswoman for tobacco giant R.J. Reynolds, said that if all three taxes are approved, she expects many smokers will quit, while others will switch to less-expensive brands.

“This is Economics 101,” she said. “This is not Einstein material.”

Meanwhile, supporters of the cigarette taxes are bracing for a bruising battle.

Roos, who is working on the initiative to benefit prenatal care programs, said tobacco companies put up a tough fight when voters approved the first cigarette tax of 25 cents in 1988.

“My concern is that we saw 10 years ago that they will throw anything, including the kitchen sink, in to defeat these measures,” he said.

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Cigarette Taxes

Ten highest taxes, per pack, on cigarettes:

1. Alaska: $1

2. Washington: 82 cents

3. Hawaii: 80 cents

4. Michigan: 75 cents

5. Maine: 74 cents

6. Rhode Island: 71 cents

7. Dist. of Columbia: 65 cents

8. Wisconsin: 59 cents