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Proposed Cigarette Tax for Health Care Heads to Ballot

The stage is being set for an ugly battle of big tobacco versus California hospitals and several health care nonprofit groups.

If successful, a ballot initiative to raise billions for health care could make California’s cigarette tax one of the highest in the nation.

This month, the state is validating the hundreds of signatures required to qualify the ballot measure’s place in the November statewide election, and it could be assigned a proposition name by early July. With more than twice the required number of signatures, supporters say they have no doubt that voters will be weighing the cost of a pack of cigarettes this fall.

Passage of the initiative, known as Healthy California, would raise the price of cigarettes by $2.60 a pack beginning January 2007, and a costly advertising war fueled by tobacco giants is expected, said Jan Emerson, spokeswoman for the Sacramento-based California Hospital Association, which is co-sponsoring the campaign.

New York City-based Altria Group, Inc., the parent company of Philip Morris USA, Inc. , the world’s largest tobacco company by sales , has already laid down nearly $400,000 on efforts to oppose the action, according to campaign finance reports.

Healthy California would raise $2.27 billion annually for health care, including $758 million for hospitals’ emergency services, $371 million for children’s health services and $92 million for nursing education. More than $170 million could go toward tobacco prevention and education programs.

Family Health Centers of San Diego and Vista Community Clinic have joined a supporters’ list of some 40 groups. About 15 more organizations serve as sponsors, including the American Cancer Society, the American Heart Association, the California Hospital Association, California Emergency Nurses Association and Campaign for Tobacco Free Kids.


Looking For Business Support

Kris Deutschman, spokeswoman for Healthy California, said members from the campaign have “reached out” to the San Diego Regional Chamber of Commerce for support.

Scott Alevy, the chamber’s vice president of public policy, said the organization has not yet decided if it will publicly support the measure. Alevy said he has not heard opposition from member companies, and that the proposal has been “well received.”

“We have a big heart, and we do care,” Alevy said. “Everyone has been touched by cancer somehow in their lives.”

Alevy said he thinks the high price of gas has preoccupied cigarette retailers , many of them gas stations.

“They have plenty of other things to worry about right now,” he said.

Members from Healthy California will present to the San Diego chamber at an upcoming meeting, and the chamber will likely take action on the matter in June.

The Los Angeles Chamber of Commerce has already joined the supporters’ list.


Financial Impacts Studied

Late last month, the California Department of Health Services released a study on the potential economic impact of the tax proposed by Healthy California. The average price of a pack of cigarettes would move from $3.95 to $6.55 , a nearly 66 percent increase. It would generate an additional $3 billion a year in tax revenue for the state, according to the study.

California more than doubled its tobacco tax in 1998, but today about half of the states still have higher taxes on smokes than California.

The state health services study says the proposed tax increase would reduce the number of cigarettes consumed in California by more than 26 percent, and that more than half a million smokers would quit because of the tax.

The proposal could save the state and individuals nearly $16.5 million in health care costs. The study did not mention money saved from lost productivity at work.

Steven Escoboza, chief executive officer of the Hospital Association of San Diego and Imperial Counties, said money thrown at the cause by large tobacco companies might be “futile” because of the “philosophical” nature of the debate.

“I think it’s really a matter of ‘smoking is bad for us,'” Escoboza said. “If this is successful, we would be able to improve emergency services, and there is no place else to get that money.”


Opposition Begins

The campaign disclosure report filed by cigarette maker Philip Morris with the California Secretary of State revealed nearly $400,000 in expenses thus far related to opposition efforts to Healthy California. Reports show the company has employed consulting firms for voter research, public relations and legal services.

Philip Morris’ Web site says the company opposes “excessive” cigarette taxes, and it discourages states from implementing them, citing that they can have “unintended consequences.”

The company maintains that high tobacco taxes encourage illegal smuggling, as well as lost revenue due to smokers heading to other states, American Indian territories or the Internet to buy cigarettes.

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