On Monday, the Senate Appropriations Committee will vote on the "California Tobacco Tax Act of 2014," a bill introduced by Senator Kevin de Leon that would increase taxes on cigarettes to pay for health care programs.
California has the 17th lowest cigarette tax in the country at 87 cents per pack. SB 768 would raise this tax to $2 per packs. The tobacco tax, which would bring in an estimated $1.2 billion in annual revenues, would be used to provide health services for tobacco-related illnesses, anti-smoking education, and smoking cessation programs.
The last time California raised taxes on cigarettes was in 1999 when proposition 99 was passed, which raised the tax by 25 cents. Last June, proposition 29, which would have raised the tobacco tax by $1 pack, was narrowly defeated as 50.3 percent of California voters rejected it.
Senator de Leon believes California taxpayers should not be responsible for the health care costs associated with the tobacco-related illnesses, which are estimated at $3.1 billion a year. The bill has received the support of the American Cancer Society, the American Lung Association the American Heart Association and other health related organizations.
However, the bill has also received its share of critics. Cigarette taxes are opposed because they are regressive and adversely affect low-income earners. A 2012 study by RTI International shows that in the state of New York, which has the highest cigarette tax at $4.35 per pack, low-income smokers spend nearly a quarter of their income on cigarettes. Nationally, low-income earners spend approximately 14 percent of their incomes on smoking.
Critics are also concerned that the tax increase would encourage people to turn to black market cigarettes. Considering California's proximity with Mexico, this could lead to an increase in smuggling activities and the issues that come with them.
Creating a new tax on cigarettes would also go against the pledge made by Governor Brown following the passage of Proposition 30 not to sign new taxes without a vote from the people. Despite the fact that tax would only affect smokers, it would follow the governor's announcement of the first state surplus in years and would be seen as an attempt by the Democratic supermajority to ask for even more money.
Since its introduction, SB 768 has been on a fast track and has already been approved by the Senate Governance and Finance Committee and the Senate Health Committee. If approved on Monday by the Senate Appropriations Committee, the bill will make a major step toward becoming law.