- Imposes additional five cent tax on each cigarette distributed ($1.00 per pack), and an equivalent tax increase on other tobacco products, to fund cancer research and other specified purposes.
- Requires tax revenues be deposited into a special fund to finance research and research facilities focused on detecting, preventing, treating, and curing cancer, heart disease, emphysema, and other tobacco-related diseases, and to finance prevention programs.
- Creates nine-member committee charged with administering the fund.
For more information, see the full text of the analysis and fiscal impact.
- Net increase in cigarette excise tax revenues of about $735 million annually by 2013-14 for research into cancer and tobacco-related disease, and for tobacco prevention and cessation programs. These revenues would decline slightly each year thereafter.
- Increase in excise tax revenues on other tobacco products of about $50 million annually, going mainly to existing health and tobacco prevention and cessation programs.
- Net increase in state and local sales tax revenues of about $10 million to $20 million annually.
- Unknown net impact on other long-term state and local government health care costs.
This is a summary only -- see also the full text of the impartial analysis.
- A YES vote on this measure means:
- State excise taxes on cigarettes would increase by $1 per pack to a total of $1.87 per pack. These additional revenues would be dedicated to fund cancer and tobacco-related disease research and tobacco prevention and cessation programs.
- A NO vote on this measure means:
- State excise taxes on cigarettes would remain at the current level of 87 cents per pack and would continue to be used for existing purposes, including childhood development programs and various health and tobacco prevention and cessation programs.
Existing State Excise Taxes. Current state law imposes excise taxes on the distribution of cigarettes and other tobacco products, such as cigars and chewing tobacco. Tobacco excise taxes are paid by distributors who supply cigarettes and other tobacco products to retail stores. These taxes are typically passed on to consumers as higher cigarette and other tobacco product prices.
The state's cigarette excise tax is currently 87 cents per pack. Figure 1 describes the different components of the per-pack tax. As the figure shows, two voter-approved measures--Proposition 99 in 1988 and Proposition 10 in 1998--are responsible for generating the vast majority of tobacco excise tax revenues. As Figure 1 indicates, total state revenues from existing excise taxes on cigarettes and other tobacco products were just over $900 million in 2010‑11.
See Figure 1 (click here and scroll down to view) Existing State Tobacco Excise Taxes
Revenues from existing excise taxes on other tobacco products support Propositions 10 and 99 purposes. Under current law, any increase in cigarette taxes automatically triggers an equivalent increase in excise taxes on other tobacco products, with the revenues going to support Proposition 99 purposes.
Existing Federal Excise Tax. The federal government also imposes an excise tax on cigarettes and other tobacco products. In 2009, this tax was increased by 62 cents per pack (to a total of $1.01 per pack) to help fund the Children's Health Insurance Program, which provides subsidized health insurance coverage to children in low-income families.
Existing State and Local Sales and Use Taxes. Sales of cigarettes and other tobacco products are also subject to state and local sales and use taxes. These taxes are imposed on the retail price of a product, which includes excise taxes that have generally been passed along from distributors. The average retail price of a pack of cigarettes in California currently is over $5. More than $400 million in annual revenues from sales and use taxes on cigarettes and other tobacco products go to the state and local governments.
Current Health Research and Tobacco Cessation Activities
Across the country, substantial amounts of money are spent on research related to cancer and tobacco-related diseases, such as heart disease. For example, the federal National Institutes of Health provide several billion dollars annually for grants and research in these areas. Private entities and nonprofits also provide funds for such research. In California, the University of California (UC) is one of the primary recipients of these research dollars. In addition, UC uses some state funds for this purpose.
Tobacco prevention and cessation programs are currently conducted by public entities, health insurers, and various other organizations. For example, approximately $50 million a year from Proposition 99 revenues is used to fund tobacco prevention and cessation programs in California.
This measure increases excise taxes on the distribution of cigarettes and other tobacco products. It uses the additional revenues raised for research on cancer and tobacco-related diseases (such as heart disease and emphysema), as well as for other specified purposes. The major provisions of the measure are described below.
New State Tobacco Tax Revenues
This measure increases--effective October 2012--the existing state excise tax on cigarettes by $1 per pack. The total state excise tax, therefore, would be $1.87 per pack. The measure also creates a one-time "floor tax" on the majority of cigarettes that are stored by businesses at the time the new excise tax is levied. Floor taxes are typically used to prevent businesses from avoiding taxes by stockpiling products before a tax goes into effect.
Existing state law requires the Board of Equalization (BOE) to annually set a tax on other tobacco products--such as cigars and chewing tobacco--at an amount equivalent to the tax on cigarettes. Accordingly, this measure would also result in a comparable increase in the excise tax on other tobacco products, with the revenues supporting Proposition 99 purposes.
How New Cigarette Tax Revenues Would Be Spent
Revenues from the cigarette excise tax increase would be deposited in a new special fund, called the California Cancer Research Life Sciences Innovation Trust Fund. These revenues would be dedicated to the support of research on cancer and tobacco-related diseases, as well as for other specified purposes. After compensating existing tobacco tax program funds for any losses due to the imposition of the new tax (as described in the next section), the remaining money would be distributed among five funds:
Backfill of Existing Tobacco Tax Programs. This measure requires the transfer of some revenues from the trust fund to "backfill," or offset, all revenue losses that are likely to occur to existing state cigarette and tobacco taxes that directly result from the imposition of the additional tax. These revenue losses would occur mainly because an increase in the price of cigarettes and other tobacco products generally reduces consumption and results in more sales for which taxes are not collected, such as Internet purchases and purchases of out-of-state products. This, in turn, would reduce the amount of revenues collected through the existing state excise taxes described above. The amount of backfill payments needed to offset any loss of funding in these areas would be determined by BOE.
- Hope 2010 Research Fund. Sixty percent of the funds would be used to provide grants and loans to support research on prevention, diagnosis, treatment, and potential cures for cancer and tobacco-related diseases. The measure states that all qualified researchers would have an equal opportunity to compete for these research funds.
- Hope 2010 Facilities Fund. Fifteen percent would be used to provide grants and loans to build and lease facilities and provide capital equipment for research on cancer and tobacco-related diseases.
- Hope 2010 Tobacco Prevention and Cessation Fund. Twenty percent would be used for tobacco prevention and cessation programs administered by the California Department of Public Health (DPH) and the California Department of Education.
- Hope 2010 Law Enforcement Fund. Three percent would be allocated to state agencies to support law enforcement efforts to reduce cigarette smuggling, tobacco tax evasion, and illegal sales of tobacco to minors, and to otherwise improve enforcement of existing law.
- Hope 2010 Committee Account. Two percent would be deposited into an account that would be used to pay the costs of administering the measure, most of which would likely be reimbursing BOE for tax collection costs.
- Summary of Arguments FOR Proposition 29:
- The American Cancer Society, American Heart Association and American Lung Association wrote Prop. 29 to save lives, stop kids from smoking, and fund cancer research. Big Tobacco opposes Prop. 29 because they know it will reduce smoking in California. Prop. 29 saves lives, but only with a YES vote.
- Summary of Arguments AGAINST Proposition 29:
- Everyone supports cancer research, but Prop. 29 is flawed: $735 million annually in new taxes but doesn't require revenue be spent in California to create jobs or fund schools. Creates new government spending bureaucracy with political appointees, duplicating existing programs. More waste, no accountability to taxpayers. No on 29. ReadForYourself.org
See the full text of Arguments and Rebuttals.
- Contact FOR Proposition 29:
- Tim Gibbs
American Cancer Society
980 9th Street, Suite 2550
Sacramento, CA 95814
- Contact AGAINST Proposition 29:
- No on 29--Californians Against Out-of-Control Taxes and Spending, a coalition of taxpayers, small businesses, law enforcement and labor.
What is Proposition 29?|
Secretary of State
League of Women Voters
Campaign Finance Data
Secretary of State
Maplight Voter Guide
News and Analysis
- On Prop 29
- See funding, endorsements, news, and editorials
Google News Search
- Forum - KQED San Francisco
- A discussion with arguments for and against the proposition hosted by Michael Krasny (5/16/12, 28 min audio)
North County Times
- On Proposition 29
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