In less than three months, voters will cast their ballot for a referendum that on the surface sounds noble, but would likely hurt tobacco merchants. The state’s Proposition 29, better known as the Tobacco Tax for Cancer Research Act, proposes to levy an additional $1 per pack of cigarettes, raising the state tax to $1.87. The measure goes to vote on June 5 and is expected to generate up to $850 million, which would be siphoned for cancer research, smoking reduction programs and tobacco law enforcement.
The last time a cigarette tax was on the state ballot was in 2006, when voters narrowly defeated Proposition 86, which would have foisted an additional tax of $2.60 per pack of cigarettes.
“Prop. 29 is a new $735 million annual tax and spending mandate that creates an unaccountable government bureaucracy filled with political appointees–without allocating any money to pay down our $10-billion-plus budget deficit or to fund existing critical programs like education or public safety,” said Californians Against Out-Of-Control Taxes and Spending.
The nearly 300-member coalition includes the nation’s two largest cigarette makers, Altria and R.J. Reynolds, along with pro-business, taxpayer groups and law enforcement.
“R.J. Reynolds opposes additional tax increases that target tobacco. We are pleased to join Californians Against Out-Of-Control Taxes and Spending, a registered campaign committee with nearly 3,000 members and growing–including taxpayers, labor, small businesses and law enforcement. Working with this broad coalition, we will communicate the strong feeling of these partners about this flawed ballot measure.”
Both Altria and Reynolds referred questions to the coalition.
Referendum critics face stiff opposition. The pitchman for Proposition 29 is seven-time Tour de France champion and cancer survivor Lance Armstrong, whose foundation last month kicked in $1.5 million to the “Yes on 29” campaign. And the pro-vote is backed by medical and anti-tobacco groups.
“We feel that Prop. 29 will save lives, stop kids from smoking and just may lead us to a cure,” Armstrong told reporters in mid-February.
To counter the pro-referendum activists, Philip Morris USA was reported to have contributed $2.5 million in campaign consultants and polling to bolster the opposition, the Los Angeles Timesreported.
What is clear is that the dollars spent continue to rise in this high-stakes vote.
Referendum opponents expressed fear about the effect a significant levy would have on the estimated 38,000 retailers that sell cigarettes and other tobacco products in California, and the nearly 37% total tobacco accounts for in their overall sales
“If Prop. 29 passes, the higher tax will cause a decline in taxable cigarette sales in California, as people look for alternatives to avoid the higher tax, such as the black market, purchasing tobacco in other states, or buying cigarettes on the Internet or from Indian reservations,” saidRon Michelson, former board member of the International Premium Cigar & Pipe Retailers Association.
“This means that retailers, already struggling in our current economy, will suffer even more under this new tax.”