California Considers Tobacco Tax Hike With Legislature On Sidelines

California currently imposes a cigarette tax of 87¢ per pack of 20 cigarettes. That's well below the rates imposed in a number of other states, including neighboring Arizona ($2 per pack) or Oregon ($1.18 per pack). It's slightly higher than Nevada's 80¢ per pack. By comparison, New York imposes a $4.35 per pack (NYC is $5.85), New Jersey is $2.70 per pack, and Connecticut is $3.40. Out on the West Coast, Washington imposes a more than $3 a pack tax.

Consumption rates have dropped in the NYC metro area with the combination of higher taxes and more restrictive locations where smoking is permitted, which creates its own problems.

Health programs funded with tobacco taxes would see lower appropriations unless the taxes are increased to cover losses (and those who kick the habit because of higher taxes/restrictions). If the state doesn't hike the taxes periodically, the programs lose necessary funding and have to curtail their operations or else draw upon general funds instead (which in CA isn't possible due to its budget woes).

The question becomes whether the tax hikes will deliver the revenues projected, and what happens to the programs when the revenues fall short (does it require higher and higher taxes or shifting funds from other programs to cover the health programs funded by the tobacco taxes).

Californians not only have to deal with the potential windfall due from a potential $1 per pack tax hike on cigarettes, but a general distrust of the state legislature to spend the money wisely. They might be for a cigarette tax hike, but they're against the legislature spending it.

The tax, which would raise an estimated $735 million, is being voted on as California is reeling from a new wave of bad budget news. Gov. Jerry Brown announced last month that the state was facing a deficit of $16 billion, and he proposed a round of severe spending cuts to deal with it.

But none of the $735 million would go to close the deficit. Organizers argued that the tax would have less chance of passing if voters thought it would go into the state coffers, and said that their only goal here was cutting down on smoking. Raising the cost of tobacco has proved to be the most effective way of discouraging smoking, particularly among teenagers.

“The voters in this state are disinclined to give money — even tobacco money — to the Legislature to spend: they don’t trust them with the money,” said Don Perata, a Democrat and former president pro tem of the State Senate, who is the author of the proposition. “We’ve become such a damned antitax state that we’ve demonized any kind of tax.”

Still, the image of a $735 million windfall rushing in at a time when California is facing a three-week cut in the school year has proved, at the least, discordant. The editorial board of The Los Angeles Times, while proclaiming itself uncomfortable to be siding with the tobacco industry, urged voters to defeat it.

“It just doesn’t make sense for the state to get into the medical research business to the tune of half a billion dollars a year when it has so many other important unmet needs,” it said. And opponents have seized on this as one of their central arguments.

“Isn’t that a little strange?” said Michael C. Genest, a former director of finance for the state who worked as a consultant to the “No on 29” effort, noting that Mr. Brown had just announced the state’s latest budget shortfall. “It’s astonishing to me that someone would go to these lengths to have a major tax increase and none of it would go to the budget.”

At 87 cents, the cigarette tax here is about half the national average, and it ranks 33rd in the nation — down from the third highest in 1999. California is one of only three states that have not raised the cigarette tax over the past decade. About 12 percent of Californians now smoke.

The money would be dedicated to cancer research and smoking cessation programs, not balancing the budget. Proponents believe that the limitation on where the money goes in the state budget is a plus; anti-tax sentiment is such that no one trusts the legislature to spend the money appropriately.

Opponents in the tobacco industry are apparently so fearful of this initiative's passage that they're throwing serious money to stop it: $47 million.

Mayor Bloomberg's Latest Anti-Smoking Idea? Setting Rules in Apartment Buildings

Mayor Mike Bloomberg's latest nanny-state idea actually makes some sense. It calls for apartment buildings to set rules about where and how people can smoke in the buildings. The proposal has to go to the City Council for deliberation.

In his latest salvo in his war on cigarettes, Mayor Bloomberg proposed sweeping legislation Wednesday to curb smoking in residential buildings — by requiring owners to adopt written policies on where butts are banned.

“This does not prohibit anything,” Bloomberg insisted. “It just gives people the right to know before they sign a lease, and it seems to be very popular.”

The law would force owners of buildings with three or more units to inform prospective tenants and buyers if smoking is permitted in flats and courtyards and on balconies and rooftops.

“What is clear is that because of air circulation in buildings if you smoke in one apartment other people in the building do get some of that smoke in their air,” Bloomberg said.

Hizzoner said the city wasn’t trying to ban smoking in people’s homes, but he hopes the law would lead to more smoke-free buildings in the future.

“You’ll have a lot of people in big buildings insisting that the rules change,” the mayor said.

This isn't an outright ban, but it would leave the decision to ban or limit smoking up to the individual apartment buildings. Apartment buildings would face fines for not providing a smoking policy.

It could also spawn additional fees to fumigate/clean apartments left by smokers along the lines of additional fees tacked on to rental cars or leased vehicles that have a smoke smell in them, or for hotel rooms that are supposed to be non-smoking only.

The whole idea is to get people to reduce smoking and exposure to second hand smoke.

This is what Bloomberg is focusing on in the waning years of his administration?

Instead of thinking big and coming up with financing and funding for transit infrastructure to get phase 2 of the Second Avenue Subway line done, he's pushing anti-smoking proposals? This is where he's spending his political capital?

Public health is fine and reducing smoking is laudable, but when the city faces ongoing fiscal problems and needs to greatly expand mass transit and come up with a viable and consistent funding for mass transit and its aging infrastructure, focusing on second hand smoke in apartment buildings isn't getting to the problems that the city really faces in coming years.

The percentage of smokers continues declining, and many smokers see their homes as the last refuge for them to maintain their habit as public spaces allowing smoking have shrunk to nonexistence.

There are so many more pressing needs around the City, including fixing the City's troubled 911 system, and he's fumbling around the edges. That's no way to run things.

Cigarette Tax Hike Means New York State Budget Shortfall

Once again, the efforts to reduce smoking via increases in taxes may have unintended consequences for state budgets. New York raised the cigarette tax and is now finding that revenues have dropped off a cliff.

The Post reported in August that retailers said sales were off by as much as 45 percent in stores bordering low-tax states like Pennsylvania and Vermont, as well as tax-free Indian reservations in western New York and on Long Island.

The hike raises the average price of a pack of Marlboros to $11.60 in New York City, compared to $5.93 in Matamoras, Pa.

Anecdotal reports suggest sales are booming on in-state Indian reservations, where tribes have so far stymied Paterson's efforts to collect taxes on cigarettes sold to non-Native Americans.

"That's what we warned would happen, and obviously it has come to fruition," said James Calvin, of the New York Association of Convenience Stores.

"Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating."

If the trend continues, the state could fall far short of the $260 million windfall Paterson expected from the 58 percent tax hike.

The increase has brought in only $13.8 million a month, according state sales figures, which means the plan could be as much as $136 million in the red by March 31.

Budget Division spokesman Erik Kriss said fiscal analysts factored a 22 percent drop in cigarette sales into their estimates.

"We feel we're going to be on target for the fiscal year," he said.

Budget officials did recently lower by $113 million the sum it expects to collect by taxing reservation sales of cigarettes.

Some sales were lost due to smokers quitting, but other smokers simply shifted their sales to other states or Indian reservations, where New York has been unable to secure tax revenues from cigarette purchases.

While reducing the number of smokers is good for the overall health of the population and can reduce health care costs, the programs funded by tobacco taxes are getting hit because of the combination of overly optimistic tax revenues and funding levels that did not anticipate the lower revenues. That means that some of the very health programs funded by tobacco taxes are in jeopardy because the revenues simply aren't there. Other revenue sources will need to be increased to make up for the deficiency - that means tax hikes or program cuts.

Throw in the latest warning label proposals that amplify the already existing smoking warning labels and tobacco sales should continue to fall.



It also means that the tobacco taxes are running into a wall where politicians will no longer be able to rely on such taxes to balance budgets or fund health programs, even though the revenues are sorely needed to balance budgets around the country.

New York Raises Tobacco Taxes In Bid To Close Multibillion Dollar Deficit

Gov. David Paterson has reached an apparent agreement with legislative leaders to include a $1.60 per pack of cigarette tax hike in the next emergency budget extender.

The move is hoped to bring another $440 million in revenues for a state that has a $9 billion deficit.

The proposal, which officials said Mr. Paterson would include in an emergency budget bill due for a vote on Monday, would also raise wholesale taxes on other tobacco products like chewing tobacco, bringing the tax on those products closer in line with those of cigarettes.

In New York City, which levies steep taxes of its own on tobacco products, a pack of cigarettes would come with a tax of $5.85, making it the nation’s first city to break $5, antismoking advocates said. That would bring the overall cost of a pack of premium cigarettes above $10 in many stores in the city.

The legislation will also include a plan to begin collecting taxes on cigarettes sold off the reservation by Indian tribes in New York, an issue that has provoked confrontations between State Police officers and protesting tribe members in years past.

The proposal would generate $440 million in revenue this year, helping close a state budget gap estimated at over $9 billion. But it is unclear whether there are enough votes to approve the plan in the State Senate, where Republicans have threatened to vote against any emergency budget bill that includes tax increases and some Democrats oppose efforts to collect taxes on cigarettes sold by the tribes.

Should the measure fail, the government would face an unprecedented shutdown. Should it pass, lawmakers must still meet to find ways to close the entire budget gap.

“Our anticipation is that the budget extender will pass, that people will not want to shut down government,” said Robert L. Megna, the state budget director, who briefed reporters on the plan at the Capitol on Friday evening.

Like so much of the state budget, it's based on hopes and wishful thinking that the revenues will appear and that the state will be able to count on revenues from cigarettes sold on Indian reservations - a situation that has resulted in violent conflicts with the Native American tribes in upstate New York.

Tax hikes will not solve the state's dire fiscal problems - only a concerted effort to reduce spending significantly can achieve that. The Governor has at least declared that he would not approve of debt refinancing in order to balance the budget, but unless spending is brought under control, some form of debt financing will be necessary because the state simply cannot count on federal funds to close the deficit.

Moreover, the increases in taxes may result in declining revenues as smokers and tobacco products users go outside New York to buy their cigarettes and tobacco products so as to avoid paying the higher taxes. That could result in significantly lower revenues and exacerbate the revenue problems.

In fact, New Yorkers could go into Pennsylvania where the cigarette tax is $1.60 per pack - or less than half the current rate in New York. Or, they could go into New Jersey where the rate is $2.70 or Vermont where the rate is $2.24. This move may drive some smokers to drive out of state to get their smokes, and it may drive some smokers to give up the habit entirely (which is a good thing for the individual's health - but real bad for the state's budget that counts on that revenue).



The budget is a mess, and with the proposed tax hikes and one-shots and other gimmicks, the state can close about half of the $9 billion deficit. That means that the state still has to figure out how to cut spending on $4.5 billion but don't hold your breath on that one.

The Unintended Consequences Of Health Advice

Remember when doctors told you that it was bad to go out in the sun? They warned of the problems with skin cancer and that exposure should be minimized and that sunscreen should be worn at all times.

They forgot to mention that sun exposure is a critical way to get a daily dose of Vitamin D, which is critical in preventing rickets, reducing diabetes, promoting proper bone growth and the deficiency has been shown to increase risk of death. Links to epilepsy have also been seen in some studies.

Moderation is the key to proper health, and a couple of 20 minute walks in the sunshine a week are sufficient to generate the amount of vitamin D needed.

Now, New York health officials, led by nanny stater Mayor Mike Bloomberg, are hoping to convince restaurants and other state and local nanny staters to reduce the amount of salt in food. Many food processors are already reducing their sodium levels in food products without any prodding; it's now seen as more healthy. Yet, how long will it be before we see an uptick in the amount of people with iodine deficiency?

The plan, for which the city claims support from health agencies in other cities and states, sets a goal of reducing the amount of salt in packaged and restaurant food by 25 percent over the next five years.

Public health experts say that would reduce the incidence of high blood pressure and should help prevent some of the strokes and heart attacks associated with that condition. The plan is voluntary for food companies and involves no legislation. It allows companies to cut salt gradually over five years so the change is not so noticeable to consumers.

“We all consume way too much salt, and most of the salt we consume is in the food when we buy it,” said Dr. Thomas Farley, the city health commissioner, whose department is leading the effort. Eighty percent of the salt in Americans’ diets comes from packaged or restaurant food. Dr. Farley said reducing salt from those sources would save lives.

Since taking office, Mayor Michael R. Bloomberg, who just began his third term, has gained a reputation as an advocate for healthy living, initiating prominent campaigns against smoking and harmful trans fats. To combat obesity, he has campaigned for calorie labeling on restaurant menus and warned consumers about sugary soft drinks.

The city’s salt campaign is in some ways more ambitious and less certain of success than the ones it waged against smoking and obesity. For one thing, the changes it prescribes require cooperation on a national scale, city officials said, because major food companies cannot be expected to alter their products for just the New York market.

Salt plays so many different roles in food from enhancing flavor to preventing spoilage and improving shelf life. It helps bread to rise and brown. Salt is critical in curing fish (bagels and lox are a staple in New York City, and this measure would affect the quality of those products). Salt is used in koshering meat to draw blood out and is used in brining to help make poultry more flavorful and juicy during cooking.

So, any move to curb salt would come into direct conflict with the need to make sure that food actually tastes good. Salt in the US is fortified with iodine to prevent iodine deficiencies, which can cause all manner of thyroid problems.

Then, there's the ongoing issue of smoking. Gov. Paterson is proposing yet another increase in tobacco products and cigarettes to help close the multibillion dollar budget deficit. As the taxes rise on smoking, and the number of smokers decreases, the amount of revenue that can be driven by smokers declines, so the state will never realize the amount of money they need to help close the deficit - and the state is hoping to use the money to fund health care programs. Those programs will be put at risk because the revenue source is incapable of creating the money needed to sustain the programs.

Obama's Health Care Plans Contradict Obama's No Tax Pledge

You could have seen this coming a mile away as there was no way that President Obama could promise to overhaul health care in the United States without taxing everyone, above and beyond his claim that 95% of Americans would not see tax increases.

The great unknown of the health-care debate as it unfolds in the months ahead is whether the current political landscape will prove more hospitable to mandates, cost controls and tax increases -- all measures now on the table that helped doom the Clinton plan,” Shailagh Murray writes for The Washington Post. “Passage of a health-care bill of the scope Congress is contemplating would be an extraordinary feat, but it is fraught with political peril, win or lose. . . . Republicans are betting that the specter of ‘big government’ can still unsettle voters.”

With each new detail, a new ad campaign is born. (And just wait until the funding mechanisms -- read: taxes -- fall into place.

“Democratic leaders in both houses said they would require individuals to carry insurance and employers to help pay for it. But they have yet to decide how to raise the necessary tax revenue,” Robert Pear writes in The New York Times. “Leaders in both chambers said they wanted to establish a new public health insurance program, which would compete with private insurers. But they have not settled on the details.”

He already broke that promise with the S-CHIP legislation, in enacting an increase in federal tobacco taxes, but the costs involved in the health care legislation are staggering, even by Obama's own standards (enacting trillion dollar deficit spending is insufficient).

Meanwhile, the Administration's claims that they would abide by pay as you go, is a futile grasp at claiming fiscal responsibility. The Administration engaged in fiscally irresponsible actions from the moment it took office by engaging in massive spending on pork projects that sap the private sector all while enriching those on the government dole. At the same time, the Administration's projections have been shown to be seriously flawed, which exacerbates the deficits going forward because if unemployment is higher than projected, revenues are decreased and the pressure on government programs, including unemployment is that much higher. It's a fiscal time bomb, and an objective reading of the economic figures would show that this Administration has failed miserably.

What makes the health care reform so misguided is that Americans already have access to health care - it's the cost that has Democrats playing games here. They can't and wont go after fixing Medicare and Medicaid - the existing government entitlement programs despite the dire funding problems with those two programs, but are seeking to massively expand government health care. Unless and until they show that they can fix the existing programs, efforts to expand government health care should be resisted.

What a Drag

If you wanted to buy a pack of cigarettes in New York City, be prepared for serious sticker shock. The taxes on a pack outweigh the actual cost of the pack by one and a half times.

The cost of the pack of 20 cigarettes sold by the tobacco companies is generally $4. Taxes now make up $6 in New York City, bringing the total cost of a pack to $10.

With a new 62 cent federal tax on cigarettes added this week with the passage of the State Children's Health Insurance Program law, the new price of a pack of cigarettes will soar past $10 in Manhattan.

The NYC price is higher than anywhere in the country and more than twice the national average. And beginning April 1, two-thirds of that cost will be made up of city, state and federal taxes.

That might have the effect of reducing the number of smokers as people look to save money where they can, and cigarette purchases might go down.

Of course, that means that the expected revenues to fund the S-CHIP expansion will fall short and money will have to be found elsewhere in the federal budget, but Democrats didn't seem to have a problem with that either.

The cigarette taxes have been falling short of revenue projections, meaning that not only are they succeeding in reducing smokers, but they're meaning that the programs that are funded from the cigarette and tobacco products taxes are falling short of their revenue projections at a time when money is tight at all levels of government.

Misplaced Priorities

Bill Gates and NYC Mayor Mike Bloomberg have decided to spend $500 million of their money on a worldwide anti-smoking campaign. They're rich enough and certainly can spend their money any way they want.

However, if they wanted bang for their buck, they could have spent that $500 million and improved the lives of hundreds of millions of people by using that money to eradicate malaria, rather than an anti-smoking campaign.

If you want to understand why much of the Third World remains economically precarious, all you have to do is look at the health care delivery systems in those countries and how diseases like malaria cripple countries.

Every year, 515 million people are afflicted with malaria. The world's population is just over 6 billion, which means that nearly 8.5% of the world's population is affected by malaria annually.

Countries that have dedicated themselves to reducing malaria outbreaks significantly have seen their economic conditions improve, including countries like Brazil and Vietnam.

$500 million could by a whole lot of anti-mosquito netting or insecticides that could eradicate the mosquito responsible for carrying the disease.

Yet, Gates and Bloomberg are plowing their money into the nanny state anti-smoking crusade, which affects a fraction of the number of people who are afflicted by malaria annually.

Tobacco As Cancer Cure?

Long considered one of the evil plants of our time, it turns out that tobacco may hold a cure to cancer.

A personalized vaccine made using tobacco plants — normally associated with causing cancer rather than helping cure it — could aid people with lymphoma in fighting the disease, U.S. researchers said on Monday.

The treatment, which would vaccinate cancer patients against their own tumor cells, is made using a new approach that turns genetically engineered tobacco plants into personalized vaccine factories.

“This is the first time a plant has been used for making a protein to inject into a person,” said Dr. Ron Levy of Stanford University School of Medicine in California, whose research appears in the journal Proceedings of the National Academy of Sciences.

Here's hoping that this research pans out.

Smoke on the Silver Screen

So, movie ratings will now factor in the amount of smoking portrayed on the screen? I have my doubts that it will do any good.

The film industry said the move underscores its growing commitment to reducing teenage smoking. If Lois Lane lights up, for example, a movie that previously would have earned a PG-13 rating, based on its levels of sex, violence, and vulgarity, might now get an R -- and a warning to parents that the film glamorizes smoking.

But anti smoking activists expressed dismay yesterday that the guidelines did not go further. Despite four years of discussion, there was no promise that a certain amount of smoking would warrant an immediate grade of R, which can be the kiss of box office death because -- in theory, any way -- it means younger adolescents can't see it without parental consent.

"You hate to use the phrase, but the proposed change to the ratings is a smoke screen instead of a concrete, measurable change," said Matthew Myers , president of the Campaign for Tobacco-Free Kids , which had argued that any film depicting smoking should be branded with an R. "It will allow Hollywood to say that it has done something while not actually forcing a change in the smoking our children see."

What's next? How about measuring how much the characters drink? Drink and drive? Drug use? Surely alcohol and drug abuse contributes to deaths just as surely as smoking does - and the damage is sometimes done in the blink of the eye - as thousands are killed each year by drunk drivers. Why not go after drinking in the movies?

On second thought, where does this end?

The US already has laws prohibiting the sale of tobacco products to persons under the age of 18. There have been warnings showing the danger of smoking for more than 30 years. Yet, people still light up and take up smoking. Is altering the ratings of movies going to change anything? Not likely.

Such a change could take classic movies like Casablanca and turn them into rated R movies.

This is an idea that simply will do nothing except assuage the feelings of a few within the entertainment industry. It will not affect sales of tobacco. There are good reasons that characters are portrayed smoking in the movies, and that's because people in general smoke. It also sets a tone and theme in a scene and if that's part of the artistic vision, I don't think it right that a movie be penalized because a character lights up even as there may be no violence or no sex (sex in a movie is a separate question altogether) shown.