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Proposition 29 Imposes Additional Tax on Cigarettes for Cancer Research State of California Initiative Statute - Majority Approval Required
See Also:
Index of all Propositions |
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League of Women Voters of California Education Fund
Fail:
2,568,715 /
49.8% Yes votes ......
2,592,791 /
50.2% No votes
| Results as of Jul 16 4:38am, 100.0% of Precincts Reporting (21993/21993) |
| Information shown below: Summary | Fiscal Impact | Yes/No Meaning | Official Information | Impartial Analysis | Arguments | | |||||||||
BACKGROUND Tobacco Taxes Existing State Excise Taxes. Current state law imposes excise taxes on the distribution of cigarettes and other tobacco products, such as cigars and chewing tobacco. Tobacco excise taxes are paid by distributors who supply cigarettes and other tobacco products to retail stores. These taxes are typically passed on to consumers as higher cigarette and other tobacco product prices. The state's cigarette excise tax is currently 87 cents per pack. Figure 1 describes the different components of the per-pack tax. As the figure shows, two voter-approved measures--Proposition 99 in 1988 and Proposition 10 in 1998--are responsible for generating the vast majority of tobacco excise tax revenues. As Figure 1 indicates, total state revenues from existing excise taxes on cigarettes and other tobacco products were just over $900 million in 2010‑11. See Figure 1 (click here and scroll down to view) Existing State Tobacco Excise Taxes Revenues from existing excise taxes on other tobacco products support Propositions 10 and 99 purposes. Under current law, any increase in cigarette taxes automatically triggers an equivalent increase in excise taxes on other tobacco products, with the revenues going to support Proposition 99 purposes. Existing Federal Excise Tax. The federal government also imposes an excise tax on cigarettes and other tobacco products. In 2009, this tax was increased by 62 cents per pack (to a total of $1.01 per pack) to help fund the Children's Health Insurance Program, which provides subsidized health insurance coverage to children in low-income families. Existing State and Local Sales and Use Taxes. Sales of cigarettes and other tobacco products are also subject to state and local sales and use taxes. These taxes are imposed on the retail price of a product, which includes excise taxes that have generally been passed along from distributors. The average retail price of a pack of cigarettes in California currently is over $5. More than $400 million in annual revenues from sales and use taxes on cigarettes and other tobacco products go to the state and local governments. Current Health Research and Tobacco Cessation Activities Across the country, substantial amounts of money are spent on research related to cancer and tobacco-related diseases, such as heart disease. For example, the federal National Institutes of Health provide several billion dollars annually for grants and research in these areas. Private entities and nonprofits also provide funds for such research. In California, the University of California (UC) is one of the primary recipients of these research dollars. In addition, UC uses some state funds for this purpose. Tobacco prevention and cessation programs are currently conducted by public entities, health insurers, and various other organizations. For example, approximately $50 million a year from Proposition 99 revenues is used to fund tobacco prevention and cessation programs in California. PROPOSAL This measure increases excise taxes on the distribution of cigarettes and other tobacco products. It uses the additional revenues raised for research on cancer and tobacco-related diseases (such as heart disease and emphysema), as well as for other specified purposes. The major provisions of the measure are described below. New State Tobacco Tax Revenues This measure increases--effective October 2012--the existing state excise tax on cigarettes by $1 per pack. The total state excise tax, therefore, would be $1.87 per pack. The measure also creates a one-time "floor tax" on the majority of cigarettes that are stored by businesses at the time the new excise tax is levied. Floor taxes are typically used to prevent businesses from avoiding taxes by stockpiling products before a tax goes into effect. Existing state law requires the Board of Equalization (BOE) to annually set a tax on other tobacco products--such as cigars and chewing tobacco--at an amount equivalent to the tax on cigarettes. Accordingly, this measure would also result in a comparable increase in the excise tax on other tobacco products, with the revenues supporting Proposition 99 purposes. How New Cigarette Tax Revenues Would Be Spent Revenues from the cigarette excise tax increase would be deposited in a new special fund, called the California Cancer Research Life Sciences Innovation Trust Fund. These revenues would be dedicated to the support of research on cancer and tobacco-related diseases, as well as for other specified purposes. After compensating existing tobacco tax program funds for any losses due to the imposition of the new tax (as described in the next section), the remaining money would be distributed among five funds:
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Created: July 26, 2012 13:02 PDT
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