Proposition 29 is Bad for Consumers, Taxpayers and the State of California

Tomorrow (June 5), California voters will get a chance to vote “yes” or “no” on Proposition 29.  If the proposition passes, California’s tobacco tax will increase by $1.00 per pack, making the total tax $1.87 per pack.  The additional revenue is supposed to be used for cancer research, smoking reduction programs, and tobacco law enforcement.  Prop 29 might be enticing to vote for but the reality is that this is a fiscal ruse on Californians.  Funds raised by Prop 29 won’t have to be spent in state and now there is information that previously collected tobacco money wasn’t spent wisely and if passed, consumers and taxpayers are locked into a 15-year mistake.  According to a May 29, 2012 article in the Anchorage Daily News   “Between 1998 and 2010, just 6 percent of the money collected from a massive lawsuit settlement and from cigarette taxes went to tobacco interdiction and education programs, the national Centers for Disease Control and Prevention reported last week, far below federal spending guidelines for effectively curbing tobacco use.”  In addition, according to Cal Watchdog, “And, Prop 29 was written to remain in place for 15 years, without the possibility of changes–not even by voters. “  Californians can’t afford to make a 15-year mistake.

With a deficit of $16 billion, California has serious financial problems and California legislators are looking for any bit of tax revenue to close that gap.  Prop 29 will bring in more than $700 million annually, yet none of that money will be used to close the budget deficit.  Such tax increases drive purchases across state lines or to untaxed or lower-tax venues, like Native American territories and the Internet. This shift would cause California retailers to lose revenue and those losses would become even more pronounced given that cigarette purchases are often bundled with other items, such as food and beverages.   

In addition to the fantasy-like revenue projections, Prop. 29 would create a new unaccountable state bureaucracy filled with political appointees.  And this is where the fun begins for the appointees (and definitely NOT taxpayers).  The newly-created Commission will be able to spend an estimated $15 million on staff salaries and overhead annually.  In addition, Prop. 29 allows a whopping $110 million annually to be spent on buildings and equipment.  There is absolutely no requirement that the money be spent with California hospitals or universities making it possible that tax money will be given to for profit corporations.  If the projected revenue doesn’t come in, there are no provisions to make sure that the state pay less on staff and salaried and buildings and equipment.  The less revenue that comes in, the higher the percentage of the money goes to overhead.

A provision that should strike fear in the hearts of all Californians is the 15-year shelf life of the Proposition.  “Notwithstanding the provisions of subdivision (a) of this section, not earlier than fifteen (15) years from the effective date of this Act, the Committee, by majority vote of its members, may recommend changes in the structure and operation of the Committee to the Legislature.”  This means that if the Proposition doesn’t work as planned, there is no recourse to fix the problems.

Everybody supports cancer research, but Prop 29 is a scam on California consumers and taxpayers.    Prop. 29 is a thinly veiled attempt to raise taxes to create a new unaccountable bureaucracy.  There are no taxpayer safeguards to ensure the wise expenditure of any the funds collected.

Prop 29 is the wrong idea at the wrong time.  Tax increases of any kind during an economic crisis will only make things worse.  Voting “NO” on Prop 29 will show elected and non-elected officials that taxpayers and consumers are sick and tired of the state’s expensive bureaucratic shell games.