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Issues Include Health Impacts and Sales Profits – Businesses Face Conflicting Issues With Prop. 28

Smoking has once again become an issue at the ballot box and the outcome could have serious implications for those involved.

In March, voters will make a decision on Proposition 28, which seeks to repeal the 50-cent-per-pack cigarette tax and the early childhood development programs funded by the tax approved in 1998 under Proposition 10.

The initiative would also require the state Legislature to approve future tobacco taxes.

Although smoking and anti-smoking advocates have much to gain and lose, the business community is caught somewhere in the middle.

Proposition 28 opponents have recently kicked off their San Diego “No on 28” campaign.

One opponent hopes the campaign will receive support from the business community, but understands that taxes in general and health care costs are both important issues for companies.

“I think this will be a tough issue for the business community,” said Debra Kelley, vice president of government relations for the American Lung Association of San Diego and Imperial counties.

– Businesses Weigh

Pros And Cons

On one hand, businesses do not favor taxation, but on the other hand, smoking has an affect on companies since many pay for health care benefits. Proposition 10 would also fund child-care programs which is another issue for companies, she said.

The Greater San Diego Chamber of Commerce decided on Jan. 27 to officially oppose Proposition 28, Kelley said.

In 1997, more than $10 billion was spent in California on health care costs that could be attributed to smoking, estimates Dorothy Rice, professor emeritus at UC San Francisco’s Institute for Health and Aging.

While the cost is high, the amount doesn’t even include indirect costs due to lost productivity, she added.

“The losses to productivity are considerable,” Rice said of employees who become ill or disabled due to smoking.

As fewer people smoke, employers will see gains. “These people will have fewer illnesses and they will be more productive to the employer,” Rice said.

She added that the proposition had a “clear effect on the downturn in smoking” for people of all ages.

– State Sees Decline

In Tobacco Sales

In the first six months of 1999, California saw a 30 percent decline in tobacco sales, Kelley said.

The decrease can be attributed in part to the passage of Proposition 10, she added.

Repealing Proposition 10 would be “terrible” and “awful” because it would lower the price of cigarettes, Rice said.

In fact, Rice believes that taxes should increase since higher prices discourage people from smoking.

With health in mind, many organizations have rallied against Proposition 28.

The American Cancer Society, the American Lung Association and the American Heart Association are spearheading the “No on 28” campaign. Two weeks ago, campaign supporters kicked off efforts to reach out to voters.

“Proposition 10 squeaked by on a razor-thin majority,” Kelley said, pointing out that the initiative lost in San Diego County.

– Polls Estimate

Voter Turnout

Polls indicate that 60 percent of people who are educated about the issue would vote no on Proposition 28, she said.

If voters don’t exhibit the same support at the polls, the passage of Proposition 28 will be the first time a tobacco tax is overturned in the United States, Kelley said.

“If we lose, we lose big,” she said.

Despite the potential outcomes, Kelley remains confident.

“I think it will be another message from California to the tobacco industry to butt out,” she sad. “I think it will reinforce California’s commitment to healthy living,” she said.

Proposition 28 proponent Ned Roscoe, president of Benicia, Calif.-based Cigarettes Cheaper!, looks at things differently.

– Positive Affect On

Cigarette Business

According to Roscoe, it’s a win-win situation for his nationwide discount cigarette business, regardless of what happens at the ballot box.

Cigarettes Cheaper! spent $1 million and collected more than 700,000 signatures to place Proposition 28 on the ballot, according to the company’s campaign newsletter.

The company has about 25 stores in the county and more than 200 in the state.

If Proposition 28 passes, Roscoe expects the firm will lose business. The campaign newsletter states that its customer count increased by 50 percent and that sales per store increased by about 18 percent after the cigarette tax.

If the initiative doesn’t pass, the business will continue to reap profits gained from the passage of Proposition 10.

According to Roscoe’s ballot argument, “Proposition 10 has been a bonanza for Cigarettes Cheaper! because more customers came to us for a cheaper price. Proposition 10 produces more than $10,000 per week in extra profit for us.”

“If we win, we will be big losers,” Roscoe said about the initiative’s affect on his business.

While Roscoe admits that customers would really appreciate not having the extra tax, he firmly believes that Proposition 10 has a bigger affect on children than on smokers.

Prop. 10 is expected to generate about $700 million that would fund early childhood development and smoking prevention programs. Roscoe contends that the early childhood programs have been designed to let the government raise children based on experts’ beliefs instead of having parents raise their kids as they see fit.

“The No. 1 thing a child needs is love and attention, and money can’t buy love and attention,” he said.

While Roscoe’s feelings on Proposition 28 are strong enough that he will be voting for the first time in March, he said the company plans to spend as little money as possible on the campaign and is not taking any money from tobacco companies.

If that is the case, Kelley said that Proposition 28 is sure to be defeated.

Although Kelley said that it is “easier to defeat an initiative,” campaigners are still being cautious.

Even if Cigarettes Cheaper! doesn’t spend any money, Proposition 28 opponents are still wary and watchful of tobacco companies or organizations that may mount independent campaigns.

Aside from voters having a second say on Proposition 10, the courts will also be looking at the issue. The company is challenging the proposition in court, saying that it violates the single-subject rule for initiatives, Roscoe said.

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