What California's cigarette tax could mean for smokers

California will vote on whether to add a $2 tax increase per cigarette pack. Who would the tax impact? 

California's upcoming ballot is smoking. This November voters will decide on whether to legalize recreational marijuana and, as state officials announced yesterday, on whether a $2 tax should be added to every pack of cigarettes and electronic cigarette products.

The proposal, backed by a coalition of health organizations, is expected to launch a battle with the cigarette and e-cigarette companies, like the one that played out in 2006 when the industry poured $66.6 million into defeating a similar proposal, reports the Los Angeles Times. The decision to add the tax to the ballot came after the campaign got the needed 585,407 signatures on a petition to add the measure.

The cigarette tax is part of a nationwide strategy to improve public health using taxation. And while tobacco products have been a forerunner for the model, they are not the only products taxed for this reason. Another example is found in soda taxes, such as the one in Berkeley, Calif., which was part of a campaign to get city residents to eat healthier. That impetus was supported by a study showing soda tax reduced consumers' caloric intake.

"States are responsible for people's health care and picking up that tab, and so originally a lot of the impetus for looking at industry solutions was looking at the state expenditures on Medicare and Medicaid and the overwhelming cost associated with smoking-related illness," Ilana Knopf of the Public Health and Tobacco Policy Center at Northeastern University Law School in Boston tells The Christian Science Monitor. 

Ms. Knopf says that the idea behind tobacco taxation is not to penalize the user or the local retailer, but "to hold the industry accountable" for their marketing campaigns and the burden that they put on public health and health care.

Ideally, she says, the money from taxes would go directly into funding programs that raise awareness about smoking hazards or help smoking cessation. Similar measures are part of the California plan for the up to $1.6 billion that the elevated cigarette tax would raise each year, which the campaign says would fund treatment and research for tobacco-related diseases.

While research on taxation as a way to reduce smoking has clearly shown that higher tobacco pricing correlates with less smoking, taxes on cigarettes may affect different populations differently.

Youth are a specific target of the California campaign, and have been shown in research to be affected more by tax initiatives, as price-sensitive consumers.

The Campaign for Tobacco-Free Kids, which is part of the coalition behind the California tax, summarizes research from a variety of sources, writing:

The general consensus is that every 10 percent increase in the real price of cigarettes reduces overall cigarette consumption by approximately 3 to 5 percent, reduces the number of young-adult smokers by 3.5 percent, and reduces the number of kids who smoke by 6 or 7 percent. 

Reducing youth smoking tends to be less than controversial, especially given that California just joined the short list of states that have raised their smoking age to 21.

However, one push-back against the ethics of cigarette taxation is that it disproportionately effects low income smokers. This argument is two-fold: One, as prices rise, these smokers will have to dedicate a larger percentage of their income than others to purchasing cigarettes, and second, because experts say there are more low-income smokers, the taxes affect them more. That makes it a regressive tax, opponents say.

"The reality is that it's smoking that's regressive and hurts lower income Americans, because they smoke at higher rates," counters Vince Willmore, spokesman for the Campaign for Tobacco-Free Kids. "By reducing smoking and serious diseases that it causes, tobacco taxes will actually disproportionately benefit lower income people."

Mr. Willmore says that the tobacco industry has also disproportionately targeted lower-income Americans.

Mark Meaney, staff attorney at Minnesota-based Public Health Law Center, who specializes in tobacco policy, agrees, telling the Monitor, "lower socioeconomic areas are more frequently targeted by the tobacco industry, especially in major urban centers."

Willmore says that taxation in particular is an effective method in crippling the cigarette’s industry main form of marketing.

"Because of restrictions on other forms of marketing today, they spend over 85 percent of their marketing budgets on price discounts, because they know reducing the price makes it more appealing to kids," he told the Monitor, citing FTC data that the companies spend nearly $9 billion yearly on advertising and promotion. "Tobacco taxes are really crucial for countering price discounts."

The tobacco industry has not formally responded to California's addition of the tax to the ballot, but David Sutton, a spokesman for tobacco company Altria, was quoted by the Los Angeles Times as having stated: "We oppose large targeted tobacco and e-vapor taxes."

California's current 87-cent state tax is below the overall state average of $1.63 per pack, according to data from the Campaign for Tobacco-Free Kids. And that figure earned the state a failing grade for taxation from the American Lung Association's yearly state evaluations. 

If the state votes to approve the tax hike in November, it will be the ninth highest tax in any state.