New cigarette tax spurs controversy

By: GIG CONAUGHTON - Staff Writer | Saturday, September 9, 2006 11:56 PM PDT ∞

Proponents say it will stop people from smoking and save lives, drum up money for hospital emergency rooms, community clinics and expand health insurance for children statewide.

It's also been endorsed by the California Medical Association, the California Hospital Association, the American Cancer Society, the American Lung Association, the American Association of Pediatricians and others.

But the multibillion dollar Proposition 86 on the Nov. 7 ballot has received lots of criticism ---- and not just from big tobacco companies and taxpayer groups.

Some doctors, law enforcement officials and even teachers have lambasted the initiative that would make the new tax part of California's constitution.

Opponents say it would spend too little money on anti-smoking programs and give too much money ---- nearly 40 percent of all the cash the proposition would create ---- to big hospital corporations. They argue it will increase black-market trade in tobacco; threaten education funding and constitutionalize exemptions for hospitals from federal anti-trust laws.

The proposition, if approved by voters, is expected to generate $2.1 billion in its first year by slapping a new $2.60 tax on every pack of cigarettes sold in California, catapulting average prices for name-brands to around $7 a pack.

Proponents backing Prop. 86 argue that the increased cost will persuade teens not to smoke, force current smokers to quit, and save tens of millions of dollars spent on medical treatment for smokers.

Of all the criticisms of Prop. 86, the loudest complaint is that private hospitals are using the banner of fighting smoking to convince the public to give them a guaranteed slice of public tax money ---- every year for perpetuity ---- to help pay emergency-room costs.

"This is just a money-grab by the hospitals," said Dr. James Knight, a San Diego urologist and former president of the San Diego County Medical Society.

Others disagree. Peter Warren, spokesman for the California Medical Association, which represents 35,000 doctors statewide, said the association has voted to support Prop. 86, even though doctors did not like everything they saw in the complicated, 15-page ballot measure.

"We're backing the proposition," Warren said. "On balance, there's so much good in here that the vote (to support) was overwhelming."

And Tracy Ream, executive director of Escondido's nonprofit Neighborhood Healthcare ---- which runs four community clinics in Escondido and one in Pauma Valley ---- said clinic leaders solidly support Prop. 86 because clinics desperately need new funding, and would share $58 million from the $2.1 billion, first-year bounty.

"This is going to create money going to health care in this county," she said, "and that's what we need."

Money, money, money


According to the Legislative Analyst's Office, a nonpartisan state fiscal and policy adviser, Prop. 86 would slap a $2.60 tax on every pack of cigarettes sold legally in the state, or 13 cents per cigarette.

In the initiative's first year, it would generate roughly $2.1 billion that would be spent on 26 different sets of programs, broken down into four general categories.

First, about $180 million from Prop. 86 would be spent to "backfill" the tax revenue that is already being created by another cigarette tax ---- 1998's Proposition 10, which taxed cigarettes to generate money for childhood development programs. Because Prop. 86 is expected to decrease overall cigarette sales by jacking up their price to smokers, it will also decrease the amount of money that voters said should be created by Prop. 10. Consequently, Prop. 86 revenues will have to cover that loss.

After backfilling Prop. 10, Prop. 86 would split its billions up into three accounts:

- "Health Treatment Services" would get 52.75 percent of what's left. Nearly 75 percent of this money would be given to hospitals to cover emergency room costs. Hospitals say that money is badly needed mainly because federal law requires emergency rooms to treat everyone, and uninsured patients can not pay for treatment.

The rest of this account would be spent on, among other things, nursing education programs, tobacco cessation services, and some college-loan repayment programs to entice doctors to serve in low-income areas.

- "Health Maintenance and Disease Prevention" would get 42.25 percent of Prop. 86 funding. Of this money, 45.5 percent would be spent to expand children's health coverage statewide. The rest would be spent on cancer programs, tobacco control media campaigns, asthma programs, heart disease and stroke programs, and several other areas.

- "Health Disease and Research" would get the smallest amount of funding, just 5 percent. That money would be spent on breast and lung cancer, research, general cancer research and tobacco-control research.

Easy mark?


Needless to say, officials who represent big tobacco companies are not happy about Prop. 86.

The "No on 86" campaign is identified by the California Secretary of State's office as a coalition of business, law enforcement, taxpayer groups and Philip Morris USA. The company is the maker of Marlboro brand cigarettes and accounts for about half of the cigarette market in the United States.

Carla Hass, spokeswoman for the "No on 86" campaign, which began an expensive TV campaign Aug. 14 and will continue through the election, said people were being misled.

"It's egregious that only 10 percent of the money from this would go to smoking-cessation programs," she said. "It's being marketed as an anti-smoking campaign. In reality it's a money grab for big hospital corporations."

Asked if the tobacco industry was an easy target, Hass said that smokers and big tobacco companies have been attacked and taxed for years and become increasingly socially unacceptable because of the associated health risks.

"Look, the tobacco industry and smokers have been pilloried for years," she said. "Are they an easy mark? Probably."

Hospital officials said they deserved the funding that Prop. 86 would provide.

Steve Escoboza, president of the Hospital Association of San Diego and Imperial Counties, said "lots" of patients who show up in emergency rooms do so because they have past or current histories of tobacco-related chronic diseases ---- including heart and lung disease.

Hass countered by saying while it was probably true that some emergency room patients were there because they smoked, hospitals had never been able to show any statistics to back those assertions.

"We can't find that number," she said.

Other criticisms


Critics such as Dr. Knight, the former head of the San Diego County Medical Society, also sharply criticized language in Prop. 86 that would give hospitals anti-trust exemptions ---- letting them talk to each other about providing emergency-room services.

Federal anti-trust laws prohibit hospitals, like other competitive businesses, from sharing business information. Doing so could allow hospitals to share wage and rate information and let them collude to fix prices or lower salaries for doctors and nurses.

Escoboza rejected the allegation that Prop. 86 would give hospitals monopolistic powers by exempting them from anti-trust laws. He said the exemptions that Prop. 86 would give hospitals was "extremely narrow" ---- and would only allow hospitals to work together to find badly needed specialists to work in emergency rooms.

Law enforcement officials, meanwhile, such as Steven Remige, president of the Los Angeles County Deputy Sheriff's Association, have worried that Prop. 86 will increase crime and cigarette smuggling.

Jim Duffy, president of the San Diego Deputy Sheriff's Association, could not be reached for comment. But Knight and Hass said if regular prices for cigarettes rise to $7 a pack, it would not be hard to imagine criminals ---- including gangs ---- going over the border, buying up cheap cigarettes, and selling them back in California at a profit that still undercuts the legal trade.

Knight also suggested that Southern California residents could make trips to Indian casinos to stockpile cheaper cigarettes that would remain unaffected by state law. Those could also end up being resold on the black market.

And one public school teacher who signed the ballot measure opposing Prop. 86 said constitutionally guaranteeing hospitals a share of taxes could cut into the constitutionally guaranteed portion of taxes that is supposed to go each year to schools.

But others listen to the arguments and are not swayed. They say Prop. 86 still would stop people from smoking, and create money for important programs.

Peter Hasapopoulos is executive director for Escondido-based Congregations for Civic Action, a nonprofit organization representing 10 area churches and 14,000 North County families.

Hasapopoulos said his group is particularly interested in the fact that Prop. 86 would expand health care programs for children, and said that his group actually hit the streets to collect 2,600 signatures to help qualify the initiative for the ballot.

"We're going to do a lot of get-out-the-vote work on it," he said.

Contact staff writer Gig Conaughton at (760) 739-6696 or gconaughton@nctimes.com.

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31 comment(s)[-]Go to Top

Randy wrote on Sep 10, 2006 3:33 AM:Where are the so-called, "big hospital corporations," in San Diego County? Here we have non-profit organizations and district hospitals. They can use a shot in the arm after providing free health care for so many poor. Big cigarette corporations' ability to rationalize has been well documented.

mike wrote on Sep 10, 2006 4:40 AM:''raising more money for illegal alien health care'

Patty wrote on Sep 10, 2006 7:11 AM:Just another way to make citizens pay the cost of illegals.

No Smoke wrote on Sep 10, 2006 7:19 AM:What controversy just tax them. Maybe more people will stop smoking!

Jon B. wrote on Sep 10, 2006 7:48 AM:We heard the smuggling arguement when proposition 10 was on the ballot. Smuggling never happened. Basic fact is that cigarette smokers are addicted because they are weak willed and lack initiative to find cheaper cigarettes. Squeeze them till it hurts, maybe they will get smart and quit sucking them butts.

Ray wrote on Sep 10, 2006 8:04 AM:Ever wonder why our government does not declare nicotine a controlled substance, because it would lead to billions in federal drug assistance. But we learn nothing from the past, the volstrad act. Personally I am going to purchase my cigarettes through a trucker friend out of state or on indian reservations ehere they are tax exempt.

Roby wrote on Sep 10, 2006 8:26 AM:So where's the prop. to tax alcohol, fast or fatty food, soda, candy....let's see, what else? Oh yes, auto insurance for teenagers, there must be more....oh wait.....oversized portions for meals. Do you see where I'm going here? Big brother does not believe that we know what's best for ourselves & we DON'T. That does not mean though that cigarettes & everything else I mentioned above & everything else that I forgot to mention should be taxed out of existence. Why not just make all of this illegal? Oh, that's right, many depend on these industries to make a living. Right & maybe doing so would only benefit criminals. Anyone out there do any reading on prohibition? No, then do you read the paper? See any stories regarding drugs. Wait.....there's the answer....make them all legal & tax them! That will bring in a TON of money that can be thrown at things that are NOT related to drug use. The FACT that this prop. will "back-fill" another prop. (10.....hey & what ever happened to the investigation of Rob Reiner spending that money illegally?) should have everyone worried. Hey but here in sunny California, voters have been know to do some pretty strange things. Why not just over tax the rich or the entertainment industry? We got a lot of that here. Oh yes, then they may just move out of State, go somewhere else that's more welcoming just like the smokers will or perhaps they will just order their cigarettes online to avoid this outrageous tax. Then we're going to need another prop. to back-fill 10 & 86. Better start working on that now. This is really stupid.

Roby wrote on Sep 10, 2006 8:32 AM:Oops, sorry...forgot this: Gasoline. Let's raise the taxes on this (over & above the taxes we pay to fund roads....that never seem actually get spent on highway infrastructure). Wouldn't a HUGE tax on this persuade most to drive ONLY when they had to & wouldn't that be good for the environment (with all of the global warming that's going on). This IS really stupid.

Paul wrote on Sep 10, 2006 8:37 AM:Seems to me the other initiatives that past on tabacco products produced revenue that went anywhere but where promised! Sacramento is a sacred temple for corrupt and lying politicians!

Nick wrote on Sep 10, 2006 8:39 AM:If I chose to smoke, that's my business. I say we add the tax to gas. Let's raise the price $3.00 a gallon. That should do the trick. Maybe then we wouldn't have so many people on the roads driving by themselves. I shake my head in dusgust when I'm on I-5 in the carpool lane and the entire Interstate is a parking lot of vehicles with one person in their car. This is a prejudiced tax aimed at a group of people. How about we aim the tax at illegal immigrants? No, then we would be labeled racists. Apparently, aiming it at smokers isn't racist.

One less freedom.. wrote on Sep 10, 2006 9:23 AM:Gov't. looks to tax out of existance - that which it can't regulate out! While I don't agree with smoking - I will vote for the tax since smokers invade every possible public space with their habit. We don't allow drinking (a heavilyt tax habit) in public - therefore we shouldn't allow smoking. Since taxation will at least limit it through cost restraint - I am all for it!

Roby wrote on Sep 10, 2006 9:38 AM:Hey, what happened to my 1st blog?

Butt out Smokers wrote on Sep 10, 2006 10:34 AM:Smoking which leads to lung cancer is the number one killer in America. It was the addiction that killed both of my parents who started smoking when Hollywood made it glamourous in the 50's. How many times do we to inhale the cigarette smoke of a person with their hand hanging out of the window at a red light? How about the smokers on the side walk at the airport? Cigarette smoking is the gate way drug to marijuana and so many other drugs. The tabacco industry can't get enough of killing off people in our country. We can also argue that there should also be a fast food or junk food tax too. Obesity is the second killer in our super sized country. Our country would be a better place if smoking were outlawed or limited to the privacy of a person's own home.

Up In Smoke wrote on Sep 10, 2006 11:39 AM:And so when everyone finally quits smoking, where are all of the millions of dollars provided by the tax going to come from to continue funding these pie in the sky programs? We'll find another habit, socially unacceptable practice or newly decleared unhealthy substance to tax. For some reason, this seems like a means by which hospitals can obtain funding to continue providing health care to illegals as the money they were being reimbursed by the federal government continues to decrease. Noticeably, when the real costs of health care to illegals was exposed this a big portion of the new tax ironically goes to emergency room services. Most people with smoking related illnesses require long-term treatment and aren't using emergency room services. I could vote for the tax if it were used to fund research on more successful means by which to help smokers quit.

Nick wrote on Sep 10, 2006 11:39 AM:The majority of the people in favor of this hate smoking, that's a fact. The funny part, is that if we added $3.00 to every six-pack of beer and bottle of wine, they would all be in an uproar, except for the Christian right. It's just another way for people to shove their personal biasness down someone else's throat. Besides, drinking kills far more people anually, than smoking....How many of you are sick of getting bubble gum stuck to your shoes from some loser spitting it out on the sidewalk? I am tired of hearing chewers smacking their gum and blowing bubbles too, so let's make it $7.00 a pack also!

GFN wrote on Sep 10, 2006 12:10 PM:Paul, you are right. Our governments took money from tobacco companies and smokers and DID NOT spend it like they said they would. The governments-federal, state, and local, are just going to keep taxing, bonding, and borrowing as long as the citizens are STUPID enough to allow it! How stupid are we?

Jill wrote on Sep 10, 2006 3:48 PM:There is already an other habit out there besides smoking and it's just as dangerous. TALKING ON A CELL PHONE WHILE DRIVING. So there!

Tony Riggs wrote on Sep 10, 2006 6:27 PM:What a load of crap: "Steve Escoboza, president of the Hospital Association of San Diego and Imperial Counties" This guy actually gets paid to spew forth lies. Is this a great country or what? Come on people, this is bill is pure and simple a bailout of the medical system because the feds and the state have done nothing to stem the tide of illegals sucking this state dry.

Curtis wrote on Sep 10, 2006 9:59 PM:I would rather just plain outlaw all forms of tobacco use in California period. If that is what the ultimate goal is, let's quit pussyfooting around and get the job done. But sending violators to jail won't help with the prison over-crowding situation either, but hugh fines would turn some otherwise law abiding citizens into crimminals, so they would still be a burden on the system wouldn't they? (I'm a reformed smoker who smoked for 30 years and have been free from them for 15 years, but price was no the reason I quit! Inconvenence however, was a large part of it.)

L in C wrote on Sep 12, 2006 7:59 AM:Tax this, tax that, tax this, tax that, tax this and tax that and that and that. And how about a tax on a tax!! Tax Taxis. Tax taidermists. Tax, tax, tax. This country should be called The United States of Taxed America. Taxes are just another way for government to bring in unheard amounts of money for them to spend in an out of control way because of their insane appetite to spend, steal, waste. Lets tax politicians. And give the money to ordinary people for, say, living expenses. Nahhhh, would'nt work. It be too taxing.

John wrote on Sep 12, 2006 8:10 AM:Ok lets just outlaw smokeing all together,Than maby the Liberal do gooders will be happy for a moment or two.Just who is going to pay for all your freebees to the illeagal aliens and plain old do nothing folks? Some of you really amaize me.OH! lung cancer is not the number one killer in America,Doctors are.Look at the stats,why do you think its called the practice of medicine?

John wrote on Sep 12, 2006 8:11 AM:Whats next? a sex tax?they havent figured out how to do that yet.

Arlene wrote on Sep 26, 2006 12:48 PM:Why don't we tax people for using the internet instead of working, or fat people that breathe up more air than a thin person. Come on! Smokers smoking outside omit way less harmful toxins than a car. If you all are so concerned about the air then quit driving your gaz guzziling SUVs and walk your fat butts to work. That would save the air.

David wrote on Oct 15, 2006 3:05 PM:With only 10% of revenues going towards anti-smoking programs, it's safe to say that this isn't about smoking. The lion's share of the money - 40% - goes directly to hospitals to cover emergency room costs to the uninsured - a vast majority of whom are ILLEGAL ALIENS! Furthermore, prop 86 amends the constitution to allow more illegals to qualify under the Healthy Families Program, so don't think that the hospitals are unaware of the so-called "unintended" consequences - they are totally "intended!" This prop should be called what it is - the "Funding and Expansion of Free Health Care for Illegal Immigrants Act."

joshua S. wrote on Dec 25, 2006 11:18 PM:ok lets stop with the passive aggressive comments, basically we are the ppl who actually care. most of the American population don’t give a damn about prop.86 all they know is "wow cigarettes are going up. this sucks." were the ppl who want to know why. this is a way for our gov to squeeze some money off the socially unacceptable smoker population. this is the issue here. if this is about telling the American population that they can not take care of themselves we must make these choices for them. bull this is America do we not see the bigger issues hear look at obesity it is getting out of control in the u.s. cause we feed our children too much. or look at look at sex issues related to teens or anyone for that matter. ya lets go ahead and outlaw sex in general unless the proper paperwork is filled and the people in question has had a full exam. that would put a sure stop to std's and pregnant teens. we could put a bigger tax on condoms cause we all know that that would help. Or since gay people is said to be the leading careers for aids lets outlaw them too I mean wont that help our economy, right? This is a bunch of bias people that want there money and want to make choices for the rest of us. if this is about hospitals and wanting to make a profit. every one that I know that doesn’t have insurance still have to make er trips and are still billed for the visit. ur getting ur money. o except the ever so popular illegal aliens that America just loves to waste our tax dollars on. im not even going to go into how much money is taken out of my check evry payday for taxes being spent on things i don’t even agree with. if we are at a public park and i am smoking a cigarette, if the smoke is really bothering you take a step back. were outside it shouldn’t effect u that bad. i mean every were i go i have to stand in designated spots to smoke. this is outside. do u really think that my smoke is worse thane the stuff your already breathing in. no u need to do some research. do u no smoking activists really have nothing better to do than to criticize us? i mean what did some1 u know die from a smoking related illness. big deal i know allot of that have but u know y it doesn’t effect me. because i know that it was there constitutional right. it was there choice to smoke. they know just as well as i do the risks ands still did it. do u know the risk u make getting into ur car everyday? no or is that u just don’t care. do u know the risk u take eating meat? i don’t but im sure there is a parentage that u can die from bad meat. its true we are an easy target for our gov to make some more money. and at the same time hook up the ppl who say pore me i want revenge on the so called bad choices i or someone i know have made... pore me i cant take responsibility for my own actions. i cant see that its not McDonalds that made me fat its my choice to eat there every day that turned me into the obese food obsessed animal that i have become. i agree this is stupid.

Adam wrote on Apr 11, 2007 10:31 AM:That has really got to hurt the wallet. I live in Sweden and they just increased the prices of cigarettes here too by a slight amount putting the cost at a little over 3 dollars (in comparison), I could not imagine paying 7 dollars per pack. However, please don't complain about tax, I live in the country with the highest tax in the world. Your cigarettes may be expensive but there are still myriads of ways to surpass this NOT TO MENTION that certain things come almost for free to you, alcohol, gas. You won't believe how absolutely little you pay compared to the rest of the world. I do fully agree however that basically saying "we are doing this for smokers own good" and then spending 10% of it on anti-smoking campaigns is complete horse-****, it's really too bad governments can get away with things like this, truly disgusting.

Jon wrote on Jul 11, 2007 5:48 PM:Tax his land, Tax his bed, Tax the table at which he's fed. Tax his tractor,Tax his mule, Teach him taxes Are the rule. Tax his cow,Tax his goat, Tax his pants,Tax his coat. Tax his ties,Tax his shirt, Tax his work, Tax his dirt. Tax his tobacco,Tax his drink, Tax him if he Tries to think. Tax his cigars, Tax his beers, If he cries, then Tax his tears. Tax his car, Tax his gas, Find other ways To tax his ... Tax all he has Then let him know That you won't be done Till he has no dough. When he screams and hollers, Then tax him some more, Tax him till He's good and sore. Then tax his coffin, Tax his grave, Tax the sod in Which he's laid. Put these words upon his tomb, "Taxes drove me to my doom..." When he's gone, Do not relax, Its time to apply The inheritance tax. Accounts Receivable Tax Building Permit Tax CDL license Tax Cigarette Tax Corporate Income Tax Dog License Tax Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax, Fuel permit tax Gasoline Tax (42 cents per gallon) Hunting License Tax Inheritance Tax Interest expense Inventory tax IRS Interest Charges IRS Penalties (tax on top of tax) Liquor Tax Luxury Taxes Marriage License Tax Medicare Tax Property Tax Real Estate Tax Service charge taxes Social Security Tax Road usage taxes Sales Tax Recreational Vehicle Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone federal excise tax Telephone federal universal service fee tax Telephone federal, state and local surcharge taxes Telephone minimum usage surcharge tax Telephone recurring and non-recurring charges tax Telephone state and local tax Telephone usage charge tax Utility Taxes Vehicle License Registration Tax Vehicle Sales Tax Watercraft registration Tax Well Permit Tax Workers Compensation Tax

clarence wrote on Jul 24, 2007 11:54 AM:how many idiots does calif. need

Joe wrote on Nov 11, 2007 7:43 AM:Tax saturated fat.

Ian wrote on Dec 31, 2007 3:43 PM:"Health Treatment Services"

"Health Maintenance and Disease Prevention"

"Health Disease and Research"

Ha! Don't make me laugh! These are not the things this new tax will help pay for. It's REALLY just going to end up in someone's pocket so they can buy another yacht. That's all these taxes are ever about! They always say, "it's for your own good".

Ian wrote on Dec 31, 2007 3:45 PM:Oh, and I'm a non-smoker by the way.

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