BLOG: Vote “No” on Proposition 29 – The Law of Diminishing Returns

West Hollywood Patch’s Poll Question asks: Will You Vote Tuesday to Increase California's Tobacco Tax?

I am voting “no” on the Poll Question because I’m voting “no” on Proposition 29. I hope you will do the same. It’s because of something called “The Law of Diminishing Returns.” Put in a more colorful way, voting for Prop 29 is “cutting your nose off to spite your face.”

At some point Californians have to make up their minds. Do you want people to stop smoking (or, let’s be real, stop buying their cigarettes from CA stores) or do you want smokers to continue paying for the following (current CA funding from cigarette taxes)?

• General support of the state budget to maintain other revenues which tobacco taxes diminish
• Tobacco education and prevention efforts
• Tobacco-related disease research programs
• Health care services for low-income persons
• Environmental protection
• Recreational resources
• Programs that also receive support from the state General Fund
• Breast cancer screening programs for uninsured women
• Research related to breast cancer
• Early childhood development programs

What Are We Trying To Achieve?

If the stated goal of getting people to quit smoking by making the cost of smoking too high is achieved, then where will the money come from to fund all this stuff in California? Do you want people to quit smoking or do you want their money? Every time someone buys a pack of cigarettes, 87 cents goes toward these state costs, 50 cents of it directly to early childhood development programs.

In addition to the 87 cents state taxes paid on every pack of cigarettes, $1.01 is paid in Federal taxes to fund: the Children's Health Insurance Program (CHIP), which provides subsidized health insurance coverage to children in low-income families nationwide. Plus regular CA sales taxes are collected, too, don’t forget.

So right now, every time a smoker buys a pack of cigarettes at over $5.00 per pack, $1.88 cents plus the regular state sales taxes collected is used to fund State and Federal programs that would otherwise not be funded or would require higher taxes or fees on the general population to fund.

The Tipping Point

We have already hit a tipping point - the last cigarette tax increase was used partially to offset a loss of revenue to the tobacco tax funded programs already in existence. In other words, every increase causes fewer packs of cigarettes to be purchased from California cigarette sellers that, in turn, lowers the amount of revenue to pay for existing programs. It’s the “LAW OF DIMINISHING RETURNS.”

Remember, people don’t have to quit smoking, they just have to buy cigarettes through alternate sources like the Internet, out-of-state or tax evading vendors that pay no California taxes.

With this new tax more than doubling the tax you’re expecting smokers to pay, the proponents have already anticipated the “law of diminishing returns” with a much bigger shell game than before – trying to plan for the amount of the new taxes that will be needed to back fill the diminishing funds for existing CA programs due to anticipated lower cigarette sales from California vendors.

The big difference this time is that diminishing returns to CA programs caused by this new CA tax will be going out of state or even out of the country to fund nearly any kind of building, leasing, salaries, equipment, research, etc. by nearly any kind of program, company or non-profit located “anywhere” as long as it’s somehow loosely related to tobacco use. Is that where you want CA tax money to go instead of to the current CA recipients?

The Real Choice

So what do you want, non-smoking Californians? Do you want smokers to keep smoking and buying their cigarettes from CA sources to pay for all these programs -  or do you want the programs to go away or start paying higher taxes yourselves to pay for all them? Before you vote “yes” for Proposition 29’s additional $1.00 per pack tax you need to ask yourself these questions.

Just to remind you of how much non-smokers would have to “cough up,” the existing cigarette taxes contributed an estimated net revenue to CA of $905 million in 2010-2011 and raises another $400 million a year in regular state and local sales and use taxes. That is what the “law of diminishing returns” created by Proposition 29 will jeopardize.

Proposition 29 proponents are relying on the standard ploy of getting non-smokers to instinctively vote to punish smokers or “make them pay.” They’re relying on the standard ploy of big tobacco vs. fighting cancer. They’re doing that in hopes you won’t read any further and that they can get you to “cut off your nose to spite of your face” because of your general disdain for smokers.

Don’t cut off California’s nose to spite its smokers’ faces because it’s not the smokers, but you, who will have to make up the difference. Vote “NO” on Proposition 29.