Wednesday, June 6, 2012

Close But No Tobacco Tax

The proposed tobacco tax was narrowly defeated, 49.8% to 50.2% in yesterday's voting.  As a prior post on this blog noted, the tax would not have gone into the general fund and thus would not have directly aided the UC budget.

However, defeat of the tax - as also noted in the prior post - could be taken as an omen of resistance to tax hikes more generally, and therefore not a good sign for the prospect of the governor's proposed tax initiative for November, which would go into the general fund.

Yes, there was heavy anti-tobacco tax advertising by tobacco companies.  Yes, the LA Times and other papers opposed the tax because of its ballot-box budgeting.  However, it was after all a sin tax on a sin most voters don't commit and it was earmarked for cancer research.  So it had appealing elements.  The governor's tax initiative involves a sales tax increase, i.e., an increase in a tax all voters pay (along with an income tax increase in the upper brackets).  Although it is labeled as going to education and public safety, the aim is not quite so precise.  Just as there was a TV campaign against the tobacco tax, you can be sure there will be such a campaign against the governor's tax.

Close as it was, therefore, the tobacco tax points to difficulties to be faced by the governor's tax initiative.  As readers of this blog will know, under the governor's budget proposal, there would be a trigger cut if the tax initiative doesn't pass including -$250 million for UC.

UPDATE: There are some news reports suggesting some provisional and dropped-off ballots may yet be uncounted - although the California Secretary of State's website indicates the result reported above.

UPDATE: The total of uncounted ballots is now put at something like 800,000.  See:


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Via Vaping said...

I'm not defending cigarette companies, they don't deserve it, but I think the taxation on these things is already sky high. States just can't rely on huge budget incomes from over taxing tobacco giants anymore. They should start increasing taxes on equally dangerous stuff like junk foods and sugary drinks.

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