Up in Smoke

There are few "higher taxes" propositions that are popular with the public. Last fall, California voters hiked the tax rate on millionaires to further fund mental health. So that's one: tax the rich. The second, perhaps more popular, tax is on smokers, who already pay more than 75 cents per pack in California taxes that goes to funding research and anti-tobacco health education. The problem is that cigarettes are a shrinking tax base--the total tax collected gets smaller and smaller as fewer and fewer people smoke. Advocates of the higher taxes can claim victory--fewer smokers--but the pet programs they try to fund languish with an ever-diminishing supply of revenues. Today, the Ventura County Star has a report on some of the new cigarette tax proposals out there--which would add up to $2.50/pack in taxes--to fund emergency care and other health education programs. But creating new programs out of a shrinking pool of tax dollars--which would likely shrink even more with an additional $2.50 cost per pack--is a risky proposition. Here are the numbers on the current programs being funded through cigarette taxes: California voters passed Proposition 99 in the late 1980s to pay for research, health education against tobacco and healthcare for indigent families. But statewide revenues from that tax of 25 cents per pack have fallen from $575 million in the early 1990s to $321 million in the current year as the proportion of smoking adults slid to historic lows. In Ventura County, the program is due to provide about $642,000 for indigent healthcare this year compared with $5.2 million 15 years ago. Proposition 10, passed in 1998, funded an early childhood initiative promoted by Hollywood director Rob Reiner. The cigarette tax went up an additional 50 cents when voters approved the proposition. But the tax that brought in $686 million in 1999 is expected to produce only $593 million this year even as the state Legislature has pushed tougher enforcement against cigarette smuggling, counterfeiting and tax evasion. You can read the entire story here.