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TAX ON CIGARETTES
Initiative Constitutional Amendment and Statute.

THE QUESTION

Should the state impose an additional tax of $2.60 per cigarette pack to fund new and expanded health services, health insurance for children, and expanded tobacco use prevention programs?

THE SITUATION

Current state law imposes excise taxes on cigarettes and other tobacco products, which support the Proposition 10 Children and Families Commission, tobacco education, the state General Fund, and research related to breast cancer. These revenues totaled about $1.1 billion in 2006-07.

California currently offers some insurance to children through Medi-Cal, the Healthy Families program, and local health coverage programs such as the County Health Initiative Matching Fund.

THE PROPOSAL

The measure imposes an additional $2.60 tax per cigarette pack. The revenues would be spent for various health programs including:

• $756 million to qualified hospitals for emergency services
• $367 million for health insurance for children
• $180 million to backfill Proposition 10 for a loss of funding that would result from the tax increase
• $134 million for disease prevention programs
• $116 million for clinics and indigent program
• $91 million for nursing education
• $52 million for other health treatment and tobacco prevention programs.

FISCAL EFFECT

The increase in the tobacco excise tax revenues will be about $2.1 billion annually in 2007-08, declining slightly annually thereafter. Local governments would likely experience an annual increase in sales tax revenues of as much as $10 million from the increase in excise tax, despite the anticipated decrease in consumption.

WHAT A YES OR NO VOTE MEANS

A YES vote means that the state would impose an additional tax of $2.60 per cigarette pack to fund new and expanded health services, health insurance for children, and expanded tobacco use prevention programs.

A NO vote means that the state could not impose an additional tax on cigarettes to fund a variety of health services.

SUPPORTERS SAY

• Ninety percent of smokers start as teens; in California 47,900 kids become new daily smokers each year.
• Nearly $16.5 billion will be saved in health care costs because more than half a million smokers in California would quit smoking.
• Money will go exactly where voters intend because Proposition 86 includes tough financial safeguards.

OPPONENTS SAY

• The largest share, almost 40 percent, goes to hospitals, many of which are funding the campaign for the new tax.
• Less than 10 percent of the tax revenue goes toward helping smokers quit or keeping kids from starting to smoke cigarettes.
• Law enforcement groups oppose Proposition 86 because it will increase crime and smuggling.

FOR MORE INFORMATION:

PRO 916-448-2720, www.yesprop86.com

CON 916-218-6640, www.86facts.org