Politichaos

Resolving the Ruckus

Proposition 56

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Cigarette Tax to Fund Healthcare, Tobacco Use Prevention, Research, and Law Enforcement.

"California Healthcare, Research and Prevention Tobacco Tax Act of 2016"

initiative constitutional amendment & statute

*PASSED*

Official Summary

Increases cigarette tax by $2.00 per pack, with equivalent increase on other tobacco products and electronic cigarettes containing nicotine.

Fiscal Impact: Additional net state revenue of $1 billion to $1.4 billion in 2017–18, with potentially lower revenues in future years. Revenues would be used primarily to augment spending on health care for low–income Californians.

Notes

  • tax on cigarettes, tobacco products (cigars, chewing tobacco, products containing at least 50% tobacco) and e-cigarettes (battery operated devices that turn liquid that may contain nicotine into a vapor)
  • tax is actually paid to the Board of Equalization by the distributor, to receive the CA tobacco tax stamp, and they pass the cost on to the consumer
  • current CA cigarette tax is 87 cents/pack cigarettes, equivalent to $1.37 for other tobacco products; national average is $1.60
  • current federal tax on cigarettes is $1.01/pack
  • plus sales tax (7.5%-10%)
  • average cost $6/pack
  • in 2013, 12% of CA adults smoke cigarettes, 4% e-cigarette users
  • adds e-cigarettes in definition of "other tobacco products"
  • also adds excise tax on distributors of $0.10 for each cigarette, $2.50 for products with '25' CA cigarette stamp, $2 for '20', $1 for '10' (including inventory on the first day of the quarter after this is enacted)
  • use of funds:
    • replace revenues lost due to lower tobacco consumption (1988's Prop 99, 1998's Prop 10, state and local sales tax decreases)
    • 5% max - cost to administer the tax
    • $30 M - law enforcement of tobacco-related laws
    • $6 M - board to enforcetobacco-related laws
    • $6 M - DPH for tobacco-related law enforcement support
    • $6 M - Attorney General for tobacco-related law enforcement
    • $40 M - UC physician training
    • $30 M - DPH dental disease prevention education
    • $400 k - adit of agencies receiving funds
    • 82% of remaining - Medi-Cal
    • 11% of remaining - California Tobacco Control Program - DPH - tobacco prevention and control programs
    • 5% of remaining - UC tobacco related disease research
    • 2% of remaining - school programs to prevent and reduce use of tobacco products by young people
  • exempt from Prop 98 education funding requirement