CA approves cigarette tax hike

The price of a pack of cigarettes -- and other tobacco products -- will be going up in California, with voters overwhelmingly backing a $2-per-pack tax to fund health care, tobacco-use prevention and other programs.

Proposition 56, dubbed the "California Healthcare, Research and Prevention Tobacco Tax Act of 2016,'' will also place an equivalent tax increase on other tobacco products and electronic cigarettes containing nicotine.

Passage of the initiative will result in a net increase in tax revenues in the range of $1 billion to $1.4 billion annually by 2017-18, with revenues decreasing slightly in subsequent years, according to an analysis conducted by the Legislative Analyst's Office and Department of Finance.

Tax revenues generated from passage of the measure will primarily be allocated to increase funding for existing health care programs; tobacco use prevention and control programs, tobacco-related disease research and law enforcement, University of California physician training, dental disease prevention programs and administration.

If the tax increases cause decreased tobacco consumption, tax revenues would be transferred to offset decreases to existing tobacco-funded programs and sales tax revenues.

A similar measure was defeated in 2012.

Proponents of the measure -- most notably the American Heart Association, American Lung Association and American Cancer Society Cancer Action Network -- argued that tobacco use results in 40,000 deaths in California every year, with tobacco-related health-care costs to taxpayers of about $3.58 billion.

"Prop 56 is a simple matter of fairness -- it works like a user fee on tobacco products to reduce smoking and ensure smokers help pay for health-care costs,'' supporters contend in their ballot argument in favor of the measure.

Opponents, however, contended only 13 percent of the money generated by the tax would actually go toward treating smokers or smoking-prevention programs for children, while 82 percent would go to insurance companies and health care providers.

"... Health insurance companies and wealthy special interests wrote Prop 56 and are spending millions to pass it so that they can get paid as much as $1 billion more for treating the very same Medi-Cal patients they already treat today,'' according to opponents. "... Instead of treating more patients, insurance companies can increase their bottom line and more richly reward their CEOs and senior executives.''