Calif. lawmakers eye $1.50 cigarette tax hike

By Chris Rizo | Aug 17, 2009

Grant Gillham

Alex Padilla (D)

SACRAMENTO, Calif. (Legal Newsline)-Democrats in control of California's Legislature are pushing to raise the state cigarette tax by $1.50 to help raise revenue amid a historically severe cash crunch.

But critics say the plan to raise the state's tobacco excise tax could collapse if Democrats are unable to muster at least some Republican support since the state constitution requires a two-thirds vote for tax increases.

Grant Gillham, a veteran political consultant based in California who's worked tax issues in nationally for the last two decades, told Legal Newsline he predicts that the plan will fail to garner much support outside the Democratic caucuses in Sacramento.

"The Republicans have made it pretty clear that they, and the public at large, are not really interested in new taxes," Gillham said Sunday.

He added that the proposed sin tax -- pushed by the American Cancer Society and the state's trial lawyer lobby, among other groups -- would come at a bad time for many California businesses and consumers, who are already feeling the pinch of the nation's economic downturn.

"This would be another brutal financial hit," he said. "We're talking about a $1.2 billion tax increase foisted on them at the worst possible time."

Under the tax plan, 85 percent of the revenue would be deposited into the state General Fund and 15 percent into the proposed Tobacco Tax and Health Protection Fund for tobacco control, tobacco disease research and lung cancer research.

Senate President Pro Tempore Darrell Steinberg, D-Sacramento, and state Sen. Alex Padilla, D-Pacoima, are co-sponsoring the legislation to raise the cigarette tax.

Proponents of their plan, outlined in Senate Bill 600, say the Golden State has one of the lowest tobacco taxes in the nation. The Washington-based Campaign for Tobacco-Free Kids says California's tobacco tax ranks No. 32 in the nation.

"Raising the tobacco tax could help mitigate program cuts to some of the most vulnerable Californians, but the tobacco industry is fighting our efforts to save these and other essential programs," Padilla said in a statement.

Meanwhile, critics are pointing to a study by the nonpartisan think tank Mackinac Center for Public Policy in Michigan, which found that more than a third of the cigarettes consumed in California come from the black market.

Gillham -- a consultant for the nation's oldest tobacco company, Greensboro, N.C.-based Lorillard Tobacco Company -- said making a pack of smokes $1.50 more expensive would "absolutely" increase illicit cigarette trafficking into the state.

"Federal authorities have arrested foreign operatives smuggling cigarettes in the U.S. in order to fund Middle Eastern terrorist operations," he noted.

The Mackinac report estimates that already more than 36 percent of California's cigarettes are smuggled into the state. California has not raised its tobacco tax for 11 years.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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