Sunday, April 2, 2017

California's cigarette tax jumped $2 on April 1, 2017

Cigarette packsCalifornians who just can't kick their nicotine habit are now paying substantially more for their addiction.

Effective April 1, the Golden State's tobacco tax went up by $2 per a pack of cigarettes.

The state's tax on smoking now is $2.87 per pack. And while that is indeed a massive jump, it's just catching up on years of a low tax rate. It's been 20 years since California increased its cigarette tax.

The tax increase, the final tax amount and the years it's taken for California to get here each were in the running for this week's By the Numbers honoree. It was a hard decision, but I'm going with the actual two-buck hike as the winner, at least from the tax collector's point of view.

More products taxed: In addition to being a higher tax, the new law broadens the tobacco tax base. 

In addition to more than doubling the state's tobacco excise tax, the ballot initiative revised the category of tobacco products to include any type of device sold in combination with nicotine. This means e-cigarettes, e-cigars, e-pipes and e-hookahs.

Smokers and vapers, however, have had time to prepare.

California voters approved the tax hike as Proposition 56 last November.

Climbing the cigarette tax ladder: The new law moves California from having one of the lowest cigarette taxes to one of the highest.

State cigarette taxes across the United States State cigarette taxes_American Lung Association Smoke Free Kids Source: American Lung Association's Campaign for Tobacco-Free Kids

Currently, notes the American Lung Association, 35 states and Washington, D.C., Puerto Rico, the Northern Marianas and Guam have cigarette tax rates of $1.00 per pack or higher.

Seventeen states (plus D.C., Puerto Rico and Guam) have cigarette tax rates of $2.00 per pack or higher.

Eight states (along with Puerto Rico and Guam) have cigarette tax rates of $3.00 per pack or higher.

New York is the lone jurisdiction with a cigarette tax rate of more than $4.00 per pack.

With the higher California tax, the average state cigarette tax in the United States as of April 1, 2017, is $1.69 per pack, according to the American Lung Association. That average tax amount does not factor in the tax rates of Puerto Rico or any of the U.S. territories/protectorates.

The no-smoking nonprofit says that the average cigarette tax in major tobacco states is 48.5 cents per pack. In case you're not an expert on agro-economics, those are North Carolina, Kentucky, Virginia, South Carolina, Tennessee and Georgia.

The average in the other 44 non-tobacco dependent states is almost four times higher, or $1.85. Again, these average calculations use only state and District of Columbia tax rates.

Taxes discourage young smokers: Anti-smoking advocates say the e-tobacco tax is critical in stopping young smokers. Youth who vape are more likely to become users of traditional tobacco products, including cigarettes, according to recent studies cited by the American Lung Association.

Vaping via MO vapes dot net

In addition, a report in December 2016 by the Surgeon General concluded that candy-flavored e-cigarettes are one of the reasons youth try vaping.

Preventing young nicotine addicts is a good thing.

And those who insist on smoking and vaping despite the added tax cost of the habit will help add to California's coffers.

Data from the state's Department of Public Health show that about 3.1 million people, or one out of nine California adults, smoke. The new tobacco tax is projected to generate $1.4 billion in its first year.

Spending smoking tax money: Most of the additional tax is dedicated to Medi-Cal, which provides health coverage for California's lower-income residents.

Supporters of the increased tobacco tax say that the state health agency incurs annual costs of around $3.5 billion in treating tobacco-related illnesses.

The remainder of the new tax, or around 13 percent, will go to support cancer research and smoking-prevention programs.

Opponents of Prop 56 remain skeptical about the value of the tax.

Since only a small percentage of the new tobacco tax money is earmarked for anti-smoking efforts, they contend that the new tax will mostly benefit insurers and other special interests.

Tax skeptics fuming: Even the timing of the tax — it took effect on April Fools' Day — seemed to support their suspicion.

Since only 13 percent of the new tobacco tax money is earmarked for anti-smoking efforts, they contend that the new tax will mostly benefit insurers and other special interests.

Even the timing of the tax — it took effect on April Fools' Day — seemed to support their suspicion.

Tax cynicism aside, opponents could have a point.

Sometimes sin taxes, which are created to make money off of vices that most view as bad, physically or otherwise, simply cause people to give up the tax activity.

That could be good for the overall health of those living in the Left Coast's largest state. But it won't help California raise more tax money.

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