California Tobacco Tax Measure Risks Going Up In Smoke

SAN FRANCISCO (Reuters) - Health-conscious Californians may mostly oppose smoking for its costs to public health and the economy but an aggressive tobacco industry campaign and general anti-tax sentiment may block a measure to raise taxes on smokers.

Airwaves in the most populous U.S. state are filling up with advertising for and against Proposition 29, a June 5 ballot measure that would add a $1 tax to a pack of cigarettes, taking the tax to $1.87, mainly to fund medical research on tobacco usage and programs to prevent and control it.

More than $40 million, mostly from the tobacco industry, has been raised to defeat the measure, dwarfing its proponents' war chest. But proponents are showing an ability to punch above their weight, most recently with a television commercial whose characters satirically explain why they support Big Tobacco.

One character says I support Big Tobacco because they killed my wife and that's one less mouth to feed.

More tough TV spots may follow as survey results released this week showed just over half of likely voters supporting the measure - down from just over two-thirds in March.

Today, 53 percent say they will vote yes, 42 percent say they will vote no, and 5 percent are undecided on the measure, the Public Policy Institute of California's survey report said.

The ballot measure in California, the world's ninth largest economy, is of national importance because other U.S. states often follow its lead in confronting problems in public health, the environment and other areas of public policy.

The drop in support puts Prop 29 below a critical level for revenue measures with election day fast approaching, said Larry Gerston, a political scientist at San Jose State University.

You've got to have 60 percent going in because there are always people who for whatever reason back off, he said, noting the drop also shows how effective advertising that taps into distrust of the state government has been against the measure.

That distrust is working against the general idea of raising tobacco taxes, which 63 percent of likely voters favor, said Mark Baldassare, the institute's president.

END RUN AROUND LEGISLATURE

Sixty-two percent of likely voters say the state government wastes a lot of money, Baldassare said. Any time you're asking voters to raise state taxes for any purpose and there is questioning of the functioning of state government it's going to raise doubts.

Californians have been questioning the finances of their state for a decade due to its persistent budget shortfalls.

Governor Jerry Brown earlier this month revised the state's projected deficit to $15.7 billion from a $9.2 billion gap forecast in January. To close the shortfall, he proposed cuts to state employees' pay and health, social and welfare programs. He also urged support for a tax measure in November to lift the state's sales tax and raise income taxes on wealthy taxpayers.

Supporters of Prop 29 did not expect smooth sailing to sway voters, but a tobacco tax increase has better odds at the ballot box than in the state legislature, said Jim Knox, a legislative advocate for the American Cancer Society.

By his count more than 30 efforts over the last three decades to have lawmakers raise tobacco taxes have failed.

There is no incentive for the legislature as a body to embrace a consequential tobacco tax increase, said Stanton Glantz, director of the Center for Tobacco Control Research and Education at the University of California, San Francisco.

Democrats won't turn down support from the tobacco industry that helps cement their majority in the legislature while its Republican minority opposes taxes in general and needs any help it can get to retain seats.

The legislature is just simply dominated by tobacco interests, said Glantz, whose work based on documents from a tobacco industry whistleblower helped produce the 1998 Tobacco Master Settlement Agreement.

That settlement between 46 states and tobacco companies was the biggest civil litigation settlement in U.S. history.

NOT FOR STATE BUDGET

Distrust of the legislature informs the language of Prop 29, which would keep revenue it raises from going into the state's general fund - effectively keeping it out of lawmakers' hands.

The roughly $800 million the measure would raise in its first year, followed by decreasing amounts, would instead be set aside, mirroring a successful 1988 ballot measure that imposed a tax of 25 cents per pack of cigarettes.

The money would be overseen by a nine-member committee that includes three University of California chancellors, three cancer research institute directors, one physician affiliated with an academic medical center and two members of disease advocacy groups that focus on tobacco-related illnesses.

In 1998, voters added another 50 cent tax to fund smoking prevention and childhood development programs. That marked the last time they backed a tobacco tax increase. Anti-tobacco advocates credit such hikes with helping drive down the state's smoking rate, although smoking by teens is creeping up.

As a practical matter you have to tell the voters where you're going to spend the money, Glantz said. They don't want the money handed over to the politicians.

Only 17 percent of likely voters approve of the job the legislature is doing, compared with 71 percent who disapprove and 11 percent who don't know how they feel, according to the Public Policy Institute of California's survey results.

But Prop 29's opponents have been tapping into a related concern, charging in one TV ad the measure would create a huge new bureaucracy. That echoes claims of wasteful government spending which helped defeat a 2006 statewide measure that urged a $2.60 tax on packs of cigarettes.

(Editng by Todd Eastham)