Millions raised for, against Prop. 29 tobacco tax

[Thomas3.20.2010]

California voters will decide next month whether to increase cigarette taxes by $1 a pack, primarily to fund research on cancer and other tobacco-related illnesses.

If the excise tax on cigarettes and other tobacco products is approved, it would be the first increase for smokers in 14 years, after dozens of failed attempts in the Legislature and a defeat at the ballot box in 2006.

The American Cancer Society, the Lance Armstrong Foundation and other nonprofit health organizations have raised about $4.7 million to back the measure, while tobacco companies have shelled out nearly $40 million to defeat it.

Proposition 29 would raise an estimated $810 million a year, according to state officials, and give California the 16th highest tobacco tax in the nation. The Golden State currently lags behind 32 states in its per-pack tax and is one of just three states that have not raised taxes on smokers in the new millennium.

"Raising the price has been shown to be the single most effective way to deter people from smoking," said Jim Knox, a vice president at the American Cancer Society's California division. "Smoking among teens, which has been going down in California for a long time, leveled off in 2004 and is showing signs of going up. ... Public health experts tell us that $1 a pack increase will prevent 220,000 kids from ever beginning to smoke, prompt 100,000 adult smokers to quit and prevent over 300,000 premature deaths."

Since any price increase tends to curb demand, the measure would dedicate some of the money it raises to backfilling any losses in other tobacco-tax-funded programs - estimated around $75 million a year - and use the bulk of the remaining $735 million to fund new research and research facilities. Some money would also be dedicated to tobacco cessation programs and law enforcement efforts targeted at illegal tobacco sales.

Distribution of the research funds would be overseen by a committee made up of directors of cancer centers, University of California chancellors and at least one person who has suffered from a tobacco-related illness. Knox said the board is modeled after the respected National Institute of Health's system, which awards grants and loans after a peer-review process.

But the committee has come under fire by opponents of the tax increase, including the California Taxpayers Association. Spokesman David Kline said the measure would create "a new state bureaucracy that really isn't accountable to taxpayers."

Kline also argued that the state doesn't need to fund research on tobacco-related illnesses, noting that the federal government already spends $6 billion a year on the same thing.

"We support cancer research and want to find a cure as much as anyone else, but at a time that California is really struggling to pay the bills and keep the lights on, we don't think it's a good idea to duplicate federal spending," he said. "Per capita cigarette consumption is already going down consistently. ... We don't think it's necessary to use a tax structure to try and correct a problem that doesn't exist."

Knox, however, said it's increasingly difficult for researchers to secure federal funding, saying that just 10 to 15 percent of qualified projects receive NIH funding these days - down from 70 to 75 percent 30 years ago. The Centers for Disease Control estimates that about 40,000 Californians die each year from smoking-related diseases, he said, at an estimated cost of $16 billion annually, from health care and lost productivity.

"If we were to capture all the costs of tobacco, we would have to raise the tax by $10 or $15 a pack," he said. "You have out-of-state tobacco companies draining billions of dollars out of the state in profits every year."

He cited a UCSF study projecting that if the measure passes, $804 million that would have gone to those out-of-state companies each year will stay in the California economy.

Kline, however, said the measure could also result in taxpayer money leaving the state, because it does not prohibit the oversight committee from awarding grants to research institutions outside California.

Knox rejected that notion, noting the state's multitude of world-class research universities and the fact that the oversight committee will be dominated by university and research leaders from California.

"You have to pay attention to who is making these charges," he said. "Every cent of the No on 29 campaign has come from out-of-state tobacco companies. ... The tobacco industry has a long history of lying to the public."

Kline said his organization and others opposed to the measure are independent of tobacco companies and believes the tax is "just a really bad long-term budget strategy."