Tobacco Tax: For & Against

Tax on Cigarettes. Initiative Constitutional Amendment and Statute.

• Imposes additional 13 cent tax on each cigarette distributed ($2.60 per pack), and indirectly increases tax on other tobacco products.
• Provides funding to qualified hospitals for emergency services, nursing education and health insurance to eligible children.
• Revenue also allocated to specified purposes including tobacco-use-prevention programs, enforcement of tobacco-related laws, and research, prevention, treatment of various conditions including cancers (breast, cervical, prostate, colorectal), heart disease, stroke, asthma and obesity.
• Exempts recipient hospitals from antitrust laws in certain circumstances.
• Revenue excluded from appropriation limits and minimum education funding (Proposition 98) calculations.

Summary of Legislative Analyst’s Estimate of NetState and Local Government Fiscal Impact:

• Increase in new state tobacco excise tax revenues of about $2.1 billion annually by 2007–08, declining slightly annually thereafter. Those revenues would be spent for various health programs, children’s health coverage, and tobacco-related programs.
• Unknown net state costs potentially exceeding $100 million annually after a few years due to provisions simplifying state health program enrollment rules and creating a new pilot program for children’s health coverage.
• Unknown, but potentially significant, savings to the state Medi-Cal Program and counties from a shift of children from other health care coverage to the Healthy Families Program (HFP); potential state costs that could be significant in the long term for ongoing support of expanded HFP enrollment.
• Unknown, but potentially significant, savings in state and local government public health care costs over time due to various factors, including an expected reduction in consumption of tobacco products.

Smoking Kills.

Public health experts agree: Taxing tobacco will save lives.

The Tobacco Control Section of the California Department of Health Services has issued an analysis of Proposition 86 titled “Economic and Health Effects of a State Cigarette Excise Tax Increase in California.”

The California Department of Health Services has determined that:

Proposition 86 Will Save Lives:

• Prevent nearly 180,000 deaths due to smoking among California kids now under the age of 17.
• Prevent approximately 120,000 additional deaths due to smoking among current California adult smokers who quit smoking.

Proposition 86 Will Reduce and Prevent Smoking:

• The tax increase alone would prevent more than 700,000 kids now under the age of 17 from becoming adult smokers.
• 120,000 high school students and 30,000 middle school students would either quit or not start smoking.
• More than half a million smokers in California would quit smoking.
• Californians would consume 312 million fewer packs of cigarettes each year.

Proposition 86 Saves Money:

• Nearly $16.5 billion saved in healthcare costs.
• Increases state revenue by over $2.2 billion per year. [See the report for yourself at www.yesprop86.com.]

That’s why Proposition 86 is supported by a broad coalition, including:

American Cancer Society
American Heart Association
American Lung Association of California
American Academy of Pediatrics/California Chapter
The Children’s Partnership
American College of Emergency Physicians, California Chapter
California Emergency Nurses Association
Association of California Nurse Leaders
California Hospital Association
League of United Latin American Citizens
California Black Health Network
Children Now
California Primary Care Association
Tobacco-Free Kids Action Fund
Los Angeles Chamber of Commerce

The initiative specifically raises the tax on a pack of cigarettes by $2.60 to help fund some of California’s critical healthcare needs, including emergency care services; health insurance for children; nursing education; tobacco use prevention programs; enforcement of tobacco-related laws; and research, prevention, and treatment of serious health problems, including cancers, heart diseases, stroke, asthma, and obesity.

Proposition 86 includes tough financial safeguards, including annual detailed public reporting of the use of tax funds, independent audits, limits on administrative costs, and a strict prohibition against the Legislature raiding the trust funds for any other government program. This means the money will go exactly where voters intend.

This measure will save lives. With smoking-related illnesses driving up our healthcare costs and overloading our healthcare system, Proposition 86 will help discourage smoking and ease some of the problems caused by preventable, smoking-related illnesses.

SAVE LIVES. TAX TOBACCO. VOTE YES ON PROPOSITION 86.

CAROLYN RHEE, Chair, American Cancer Society, California Division
P.K. SHAH, M.D., President, American Heart Association, Western States Affiliate
TIMOTHY A. MORRIS, M.D., Board Member, American Lung Association of California

Helping people stop smoking and keeping kids from starting is important. Unfortunately, less than 10% of the $2.1 billion in new tax money goes to programs that help smokers quit or keep kids from starting. Here’s what’s really in the initiative:

• Huge hospital corporations are spending millions promoting Prop. 86 because they will pocket hundreds of millions of dollars every year. HMOs will also get millions of dollars each year.
• Almost 40% of the $2.1 billion in new tax money from Prop. 86 goes to hospitals—THAT’S OVER $800 MILLION A YEAR THAT HAS VIRTUALLY NOTHING TO DO WITH STOPPING SMOKING!
• The $2.1 billion comes from an unfair $2.60 tax increase on each pack of cigarettes—an increase of almost 300%.

Here’s what Prop. 86 is really all about:

• Section 9 gives hospitals an exemption to antitrust laws.
• There’s nothing in Prop. 86 that limits what hospitals can charge taxpayers for emergency services for the uninsured. This amounts to an open taxpayer checkbook!
• There are no guarantees on how the money will be spent.
• Under California law approved by voters (Proposition 98), approximately 40% of any new taxes are dedicated to our schools. The huge hospital corporations don’t want to share with our schools and kids, so they included a CONSTITUTIONAL EXEMPTION (Section 15) so that NONE of these funds will go to our schools.

Check it out for yourself: www.86facts.org.

Prop. 86 is really about special interests amending our Constitution for their benefit.

No on 86.

MONICA WEISBRICH, RN, Operating Room Nurse
JAIME ROJAS, President, California Hispanic Chambers of Commerce
MALCOLM SIMPSON, Public School Teacher

VOTE “NO” ON PROPOSITION 86—STOP THE $2.1 BILLION TAX HIKE!

We all want to improve our healthcare system, but Proposition 86 is the wrong solution. Prop. 86 is an unfair tax increase supported by special interests who are amending our Constitution to benefit themselves.

Prop. 86’s proponents say it’s about encouraging people not to smoke, but it isn’t. It’s really a money grab by huge hospital corporations who will reap hundreds of millions of taxpayer dollars each year!

• Less than 10% of the tax revenues go toward helping smokers quit or keeping kids from starting.
• The largest share—almost 40%—goes to hospitals, many of which are funding the campaign for the new tax.
• HMOs will pocket millions from Prop. 86. WHY ARE HUGE HOSPITAL CORPORATIONS SPENDING MILLIONS TO PASS PROP. 86?
• Hospitals wrote Prop. 86 to give themselves an exemption to antitrust laws, giving them legal protection to divvy up and limit many medical services, and then raise prices without worrying about competition.
• Prop. 86 puts no limits on what hospitals can bill taxpayers for emergency services for the uninsured. Why should hospitals be allowed to charge taxpayers several times what they charge insurance companies for the same treatment?

PROP. 86: ANOTHER LOTTERY MESS

Like the state lottery, it will be nearly impossible for voters to know how the new taxes will be spent. Prop. 86 lists program after state program that gets a cut of the estimated $2.1 billion in new tax revenue.

PROP. 86: NO ACCOUNTABILITY TO TAXPAYERS

Prop. 86 throws millions of dollars at new bureaucratic state programs without adequate legislative or governmental oversight. There are NO GUARANTEES how the money will actually be spent or assurances the money won’t be wasted.

PROP. 86: INCREASES OUR DEFICIT

Prop. 86 contains 38 pages of spending mandates. But experts agree that the amount of money raised by this tobacco tax will decline over time. Declining revenues and demands to fund Prop. 86’s programs will only worsen our deficit. Other important programs like education, transportation, and law enforcement might have to be cut, or taxes raised further.

PROP. 86: INCREASES CRIME

Law enforcement groups oppose Prop. 86 because it will increase crime and smuggling. Stolen and smuggled cigarettes are already a big source of money for gangs and organized crime. If Prop. 86 passes, a single truckload of stolen cigarettes could be worth over $2 million to criminals.

PROP. 86: UNFAIR

Prop. 86 taxes smokers to pay for programs that have nothing to do with smoking, like obesity programs. Less than 10% of the tax revenues go toward helping smokers quit or keeping kids from starting.

PROP. 86: LOCKED INTO OUR CONSTITUTION

Proposition 86 amends our Constitution and statutes. When problems and abuses are discovered, it will be nearly impossible for the Governor or the Legislature to fix them. The Constitution should not be changed for a special interest money-grab.

Please join health professionals, law enforcement, taxpayers, and small businesses in voting NO on Proposition 86.

LARRY McCARTHY, President, California Taxpayers’ Association
JAMES G. KNIGHT, M.D., Past President, San DiegoCounty Medical Society

Make no mistake; big tobacco corporations are bankrolling opposition to Prop. 86.

Raising cigarette taxes means fewer people will smoke—especially kids. That hurts tobacco company profits.

They’ve seen the report by the California Department of Health Services which says that Prop. 86 will reduce the number of cigarettes sold in California by 312 million packs each year.

The report also says that Prop. 86 will prevent 700,000 kids from starting to smoke and save 300,000 lives.

Tobacco companies invest over $1 billion a year marketing cigarettes in California. This is a market they won’t give up without a fight.

When executives of the tobacco companies were called before Congress and put under oath, incredibly, each and every one of them lied by testifying that cigarettes are not addictive.

They lied to Congress under oath and now they’re lying to you.

Their arguments against Prop. 86 are outright distortions and untruths.

Read Prop. 86 for yourself. You’ll see that it includes specific and tough financial safeguards, independent audits, and strict limits on administrative costs. Funding is directed to proven, successful public health programs.

Californians pay more than $8 billion each year in medical costs due to smoking—that’s $700 per family per year—whether you smoke or not. The Department of Health Services report confirms that Prop. 86 will help reduce those costs.

Big tobacco will do, say, and spend anything to defeat Proposition 86. Don’t believe it.

Save Lives. Reduce Smoking.

Vote Yes on Proposition 86.

MILA GARCIA, R.N.,Member, American Heart Association, Western States Affiliate
WILLIE GOFFNEY, M.D., FACS, President, American Cancer Society, California Division 2006–07
RICK DONALDSON, Ph.D., RCP, Chair, American Lung Association of California