Tobacco Tax Compromise Stumbles in Legislature

cigarette smoking ashesThe California Legislature passed a package of bills intended to diminish tobacco sales. While one measure allows county governments to seek a tax on cigarettes, a state tobacco tax was not included in the package. That’s not to say many in the Legislature would like a tobacco tax and efforts were made to convince the tobacco industry to go along with a deal that would include a state tax increase. The proposed deal would result in scuttling a ballot initiative aimed for November to increase the tobacco tax and kill some of the bills in the package.

Here’s how Los Angeles Times columnist George Skelton explained the maneuvering in his Monday column:

Behind the scenes, Senate leader Kevin de León (D-Los Angeles) quietly is offering to negotiate with tobacco. If the industry were to allow the Legislature to pass a state tobacco tax, perhaps some of the package could be snuffed.

Then sponsors of a November ballot initiative that would raise the state cigarette tax by $2 per pack might be persuaded to withdraw their measure. That would save the tobacco industry upward of $100 million fighting the initiative.

Why wouldn’t the tobacco industry consider a more modest increase in the tax on cigarettes if some of the restrictive measures on tobacco were pushed aside and the initiative was pulled before it qualified for the ballot?

While tempting, the tobacco industry saw a big hurdle with any deal. There was no guarantee that if the deal were made a different interest group than the one behind the current ballot initiative would come along with a new tobacco tax effort in the near future. Or a future legislature could also consider a tax increase on tobacco.

Without a solid guarantee, the tobacco industry would rather take its stand now against any state tax increase. There is no way negotiating legislators can guarantee that some outside group won’t go to the ballot via the initiative with a new tax increase even if a deal is struck.

Many supporters of more tax revenue think tobacco and cigarettes is a good target because non-smoking voters outnumber smokers and tobacco users. Thus it is tempting for those who want to raise revenue to consider a tobacco tax.

The possibility that a new effort to raise tobacco taxes in the near future could not be guaranteed held back any legislative compromise on taxes.

Joel Fox is editor of Fox & Hounds and president of the Small Business Action Committee.

This piece was originally published by Fox and Hounds Daily