State and Local Strategies of the Tobacco Industry
A STATE TAX PLAN CALIFORNIA
Abstract
Discusses plans to prevent increases in excise taxes in California. Includes the following sections: 1) Political and Legislative Situation, containing legislative outlook for 1984, legislative process information, support groups including Tobacco Action Network, Retailers and Retailer Organizations, Tobacco Institute, Industry Members and Subsidiaries, Allied Industries, and Business Associations, and a historical background of cigarette taxes in California; 2) Position Papers on a Cigarette Tax Increase in California, containing reasons for opposing cigarette taxes, a "one page fact sheet for legislators," and discussion of economic impact of cigarette tax increases; 3) Legislative Strategy.
Fields
- Named Organization
- A CITIZENS COMM
- ADVISORY COMMISSION ON INTERGOVERNMEN
- ASSEMBLY COMM ON REVENUE + TAXATION
- ASSEMBLY COMM ON WAYS + MEANS
- BROOKINGS INST
- BUREAU OF THE CENSUS
- CA LEGISLATURE
- CA MFG ASSN
- CA SENATE
- CBS
- CHAIN DRUG REVIEW
- CHAMBER OF COMMERCE
- CITIZENS CAMPAIGN AGAINST BOOTLEG CIGA
- CITIZENS NETWORK
- CONVENIENCE STORE NEWS
- FEDERAL BUREAU OF ALCOHOL TOBACCO + FI
- FW STRICKLER + SON
- GEORGE BENSON + SON
- GLEN ROWE VENDING CO
- GOVERNORS OFFICE
- GRANTS PIPE SHOP
- INTERNAL REVENUE SERVICE
- NATL CENTER FOR HEALTH STATISTICS
- NINETY FIFTH CONGRESS
- NORTH COAST DISTRIBUTORS
- NY LEGISLATURE
- NY STATE SPECIAL TASK FORCE ON CIGARET
- PALISADE WHOLESALE
- PM, PHILIP MORRIS
- RACINE + LARAMIE
- SENATE COMM ON FINANCE
- SENATE COMM ON REVENUE + TAXATION
- STATE ACTIVITIES POLICY COMM
- STATE COMMISION OF INVESTIGATION
- STATE DEPT OF TAXATION + FINANCE
- SUPERMARKET BUSINESS
- TAN, TOBACCO ACTION NETWORK
- TAX DEPT
- TI STATE ACTIVITIES DIVISION
- TI, TOBACCO INST
- TOBACCONIST
- TREAS, DEPT OF THE TREASURY
- TTC, TOBACCO TAX COUNCIL
- US DEPT OF COMMERCE
- WINE INST OF CA
- Named Person
- ALQUIST,A
- ALVERSON,D
- BENSON,T
- BEVERLY,R
- BOATWRIGHT,D
- CAREY,H
- CATES,C
- CURRAN,PJ
- DEUKMEJIAN,G
- DONATI,A JR
- GRANT,E
- Ham, J1994 Member of Coresta Task Force
- HANNIGAN,T
- HAYDEN,T
- KELLY,P
- KEMP,J
- KIRK,E
- LAZZARINI,K
- LEONARD,W
- LOTT,T
- MAITINO,M
- MOGILNER,G
- RICHARDSON,HL
- RINDENOW,H
- ROCKEFELLER,N
- SOHN,A
- STRICKLER,F
- TULLY,JH JR
- VASCONCELLOS,J
- Wilson, M. (Mgr. Engineering, Planning & Admin, B&W RD& E, 1987)M. Wilson was Manager of Engineering Planning & Administration for B&W in the RD&E Department in 1987. (Source: B&W's Initial Disclosure, State of Texas vs. ATC, et al., 6/5/96)
- ZLOTOFF,F
- Author
- TI, TOBACCO INST
- Region
- CALIFORNIA
- New York
- Subject
- Cigarettes
- economics
- Industry Strategies
- legislation
- Politics
- Smuggling
- State Level
- Taxes
- Trade Associations
- Advocacy Groups
Document Images
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401WL:
THE TOBACCO INSTITUTE
POST OFFICE BOX 8269
LIBBIE SQUARE
1801 LIBBIE AVENUE
RICHMOND, VA 23228
804/282-4275
A STATE TAX PLAN - CAL I FORN'7 A
The State Tax Plan is for the use of the lobbyist and/
or lobbyists in California under the directorship of
the State Activities Division of The Tobacco Institute.
August 4, 1983
N;ITIONi1L OFFICE « 1875 1 STREET. NORTHWEST WASHINGTON, DC 20006' 202/457-4800
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A STATE TAX PLAN - CALIFORNIA
T, Political and Legislative Situation
A. Legislative Outlook for 1984
1. Overview of 1983 Session to Date
2. Threat of Cigarette Tax Increase for 1984
B. Make-up of the Legislative Process
1. Governor
2. Assembly
3. Senate
4. Legislature in General
C. Support Groups
D. Historical Background of the Cigarette Tax
in California
II. Position Papers on a Cigarette Tax Increase in California
A. Reasons for Opposing an Increase in the Cigarette Tax
1. Unfair and Selective Tax
2. Regressivity
3. Effects on Economy
4. Cigarette Bootlegging in California
5. Declines'in Sales and~Per Capita
B. One Page Fact Sheet for Legislators and Other
Interested Parties
C. Economic Impact of an Increase in the California
Cigarette Tax Rate
1. Tables Derived from Econometric Sales Model
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for California ~.
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A STATE TAX PLAN!- CALIFORNIA (continued)
III. Legislative Strategy
A. Short Term Strategy
B. Long Term Strategy
C. Support Materials
1. List of Qualified Individuals Who Will Testify
2. Question & Answer Format for General Use
3. Bills Pending as They Become Available.
4. Summary Studies
(a) Bootlegging Background Paper (Emphasis
on New York Situation) - This report is
included as the same situation could and
may happen in California.
(b) Graphs and tables
August 4, 1983
Section I-A-1
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Overview of 1983 Session (as of August 4, 1983)
Despite the fact that republican Governor George Deukmejian
is on record opposing any tax increases in California, two
cigarette tax bills (SB-813 and AB-70) were serious threats to
the tobacco industry in the first half of this legislative year.
Both bills are now dead after a lengthy struggle to defeat them~.
The bills managed to be voted out of committee but failed to
garner the necessary two-thirds vote for passage in the Legis-
lature. It was expected that had the bills passed the Legislature
and a tax increase beenenacted, the Governor would have vetoed
the legislation. However, whether his veto would have been
sustained or not is questionable.
California began this legislative session with a serious
deficit projected at $1.5 billion which has been alleviated by
the Governor's budget bailout package. Governor Deukmejian's
financial rescue plan was signed into law on February 17, 1983.
It reduced the deficit in the $25 billion budget to $900 million,
primarily through program cutbacks and accelerated tax collections.
A tax loop-hole bill (AB-1428) which is endorsed by the
Governor is still lingering in the Legislature. This bill would
tighten loopholes in the present tax law and eliminate many
categories of exemptions under the general sales tax. The passage
of this bill would be expected to generate another $466 million ~
in tax revenue. Unfortunately, this bill can:also be used as a N
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vehicle for adding cigarette tax legislation when the session
reconvenes in August. At the present time this does not appear
likely. There is also the possibility that new cigarette tax
legislation may be introduced later this session.
The two bills that were serious threats included other
tax hikes as well as the cigarette tax increase. The bills were
introduced largely in response to pressure for more money for
school aid. In California 70 percent of the cigarette tax goes
to the general fund and 30 percent is allocated to local aid.
Key provisions of the Senate bill (SB-813) included:
-. 5~ increase in the cigarette tax rate.
- 5% increase in business taxes for large firms.
-4% increase in the general sales tax (now 6%) for
a two-year period.
- 50% increase in taxes on alcoholic beverages.
- removal of the sales tax exemption on candy and gum.
Key provisions of the Assembly bill (AB-70) included:
- 5¢ increase in the cigarette tax.
- 5% surcharge tax on banks and corporations.
- elimination of tax exemption for oil windfall profits.
- accelerated property tax reassessments.
- increase in the alcoholic beverages tax.
Although these bills have been defeated, similar legislation may
again be introduced as the session wears on this summer and fall.
Although Governor Deukmejian has been adamantly opposed to 05
any tax increases, he is a part of the minority party in ~
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California. The democrats who control both the Assembly and the
Senate have been clamoring for tax increases to off-set reduc-
tions in state services. The Governor has steadfastly held to
his promise of no tax increases. The only wavering has been in
the inclusion of a triggering mechanism in his budget package
that would allow the state's six percent sales tax rate to jump
an additional one percent if revenues do not keep up with anti-
cipated expenditures. It would appear at this point that the
revenue anticipated from the budget package will preclude this
from happening.
Since all budget and financial legislation must receive
a two-thirds vote for passage, it means that even though the
Legislature has a democratic maj,ority, some republicans must
vote with the democrats on the issue of a cigarette tax increase
for passage of such legislation:.
August 4, 1983
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Section I-A-2
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Threat of Cigarette Tax Increase (1983-1984)
The legislative session in California runs for two years
which means that a cigarette tax bill can be introduced at
virtually anytime. Although the two bills that were causing
the tobacco industry serious concern (SB-813 and AB-70) regarding
a cigarette tax increase have both been defeated, there is always
the distinct possibility that other cigarette tax increase leg-
islation may be introduced as the session wears on. There is
even the remote possibility that new legislation for a tax increase
may be'introduced as early as August when the Legislature recon-
venes from its summer recess.
Another possibility is that Assembly bill AB-1428 which is
the Governor's bill designed to remove loopholes from the current
tax laws and eliminate a number of exemptions from the sale tax
may be revived. A cigarette tax hike could be tacked on to this
as a vehicle bill.
Governor Deukmejian is on record opposing any tax increases
and his budget bill passed in February has removed most of the
deficit facing California. However, many democrats are opposed
to cutbacks in services and a number of legislators are seriously
concerned over the needs of education. In order for any revenue
measure to pass the Legislature a two-thirds vote is needed so
some republicans must side with democrats for a cigarette bill
to pass. If such a bill did pass, it is likely that the Governor
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would veto the bill but his veto would have to be sustained by
the Legislature. At the present time cigarette tax proposals
seem likely as the session wears on but passage is unlikely under
current conditions. However, if the budget bill fails to produce
anticipated revenues, or if the lobbying effort for education
heats up, or if the Governor changes his stand on tax increases
and republicans join democrats in opposing cutbacks in services,
then the outlook for a cigarette tax increase could become very
serious quite suddenly.
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August 4, 1983 ~
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Section I-B
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Make-up of the Legislative Process
1. Governor
The Honorable George Deukmejian took office in January of
this year with a term of four years. He is a republican while
the majority of the Senate and:Assembly is democrat. He has
publicly stated his opposition to raising taxes on cigarettes
and liquor as a method of increasing aid to the state's schools.
Governor Deukmejian has openly criticized democratic leaders for
demanding more aid for education while being unwilling to accept
cuts in other programs to pay for it. Assembly democrats sided
with the Governor in his push for AB-1428 which would close
loop-holes in the present tax structure and remove certain ex-
emptions from the sales tax law. The bill's total package would
bring in an estimated $466 million in additional tax revenue.
Though the bill has passed the Assembly, it is still lingering
in the Legislature awaiting further action. The democrats would
like to force Governor Deukmejian to back off on his campaign
promises of no tax increases. As it stands now, the industry is
encouraged by the Governor's attitude of no tax increases in
selective sales taxes such as cigarette taxes.
2. Assembly
The democrats have a substantial control in the Assembly.
There are 48 democrats and 32 republicans in the Assembly.
Cigarette tax bills are heard in either the Committee on Revenue
