Lighting up a revenue idea
Taxing tobacco is cowardly. When politicians do it, they mostly hit the poor and the powerless.
I’ve written that for a decade and I’m still writing it.
That acknowledged, I believe it’s time to raise the tobacco tax. Raise it by a hefty amount. Be a bully.
It’s cowardly because smokers are sitting ducks -- unlike billionaires, big corporations, labor brotherhoods and other political investors, er, campaign contributors.
But there’s no stomach for raising broad-based taxes -- income, sales, vehicle -- at least among Gov. Arnold Schwarzenegger, Republican legislators and apparently the voters. Anyway, those taxes already were hiked temporarily in February and voters rejected a two-year extension. The oil lobby so far has fought off Democratic efforts to impose an oil extraction tax. Property taxes seem sacrosanct.
State government, however, desperately needs more money -- partly to pay for the costly medical care of impoverished smokers who suffer tobacco-caused diseases. And a logical source for the money is smokers themselves.
* It costs state and local governments about $4 billion annually for the treatment of tobacco-related diseases, according to the American Lung Assn. of California. Medi-Cal, the state insurance program for the poor, spends nearly $3 billion.
* Poor people smoke proportionately more than the rest of the population. They’re the ones who depend on government-paid medical care.
The state Department of Public Health reports that roughly 14% of California adults smoke. But 20% of Medi-Cal recipients do. So do 22.5% of the uninsured who tend to clog costly hospital emergency rooms where, by law, they must be treated.
Among adult men who earn less than $25,000 and didn’t go to college, nearly 25% smoke. Among those making more than $50,000 with a college degree, only 7.5% smoke.
* California’s tobacco tax is relatively low, ranking No. 32 in the nation, according to the Washington-based Campaign for Tobacco-Free Kids. It’s at 87 cents per cigarette pack and hasn’t been raised in 11 years. Meanwhile, the vast majority of other states have raised theirs, 19 in the last two years. The national average is $1.32 per pack. The highest: $3.46 in Rhode Island.
Neighboring states: Arizona $2, Nevada 80 cents, Oregon $1.18. So there’s no incentive for smokers to cross the state line and stock up.
* To close the budget deficit, Sacramento has ripped the poor people’s safety net. Tens of thousands of children are expected to be kicked off the Healthy Families healthcare program for the working poor. Hundreds of thousands will lose some benefits. Medi-Cal, In-Home Supportive Services, Child Welfare Services, Early Start programs for developmentally delayed toddlers -- all sharply cut. Not to mention schools, prisons and parks.
(Full disclosure here: My daughter works for a firm that is helping some groups push for a tobacco tax increase.)
Senate leader Darrell Steinberg (D-Sacramento) and Sen. Alex Padilla (D-Pacoima) are co-sponsoring a bill to raise the tax by $1.50 a pack, pushing the state total to $2.37. It would generate $1.2 billion annually.
Another bill is sponsored by Assemblyman Tom Torlakson (D-Antioch) that would increase the levy by $2.10, netting $2 billion. “I set it high for negotiation purposes,” Torlakson says, “but lower than what voters rejected in 2006.”
That year, voters turned down Proposition 86, which would have raised the cigarette tax by $2.60. But it lost only narrowly, despite a $66-million opposition campaign financed by tobacco companies.
Recent polls, however, have shown that the idea of raising tobacco taxes is supported by an overwhelming majority of California voters -- undoubtedly because they don’t smoke.
The tobacco companies argued successfully that Prop. 86, sponsored by the hospital industry, didn’t provide money for anti-smoking programs -- as if the cigarette peddlers really gave a used butt about that. But to head off that argument again, Torlakson included money in his bill to help smokers quit, as well as funds for healthcare, schools and lung cancer research.
The Steinberg-Padilla bill has a subtle difference: It provides $160 million to beef up the state’s smoking-prevention efforts -- TV ads and the like -- especially among teenagers. The rest of the money would go into the state general fund.
Democratic legislators attempted two months ago to pass a $1.50-a-pack cigarette tax hike, but it required a two-thirds majority vote and Republicans wouldn’t budge.
They’ll try again after the Legislature reconvenes Monday following a three-week vacation. Next time, they’ll probably try to do it with a majority vote, a questionable legal move.
“We are digging and digging and digging to see if there might be a way to do this outside of a two-thirds vote context,” Steinberg says.
Then Schwarzenegger would have to sign the bill. He’s unpredictable.
Two years ago, the governor agreed to raise tobacco taxes if it helped finance healthcare reform. That effort died. But he wouldn’t agree to a tobacco tax hike recently to protect healthcare programs from his budget knife. Yet Schwarzenegger privately has said he still might sign a cigarette tax increase as part of some future healthcare reform. So he’s not opposed to the tax if he gets to spend the money.
“In any other state or country, would anyone think it would be more reasonable to cut healthcare for hundreds of thousands of children than to raise the tax on tobacco?” Steinberg asks rhetorically.
The tobacco lobby claims that steeply raising California cigarette prices will spark rampant smuggling. There might be some. But every state that has raised its tax has reaped higher revenue.
The lung and heart organizations’ basic goal is to raise tobacco prices so high that teens and the poor can’t afford to buy the smokes. That’s a proven strategy.
The tax does pick on the poor. But payment is voluntary.