Capitol Alert

Philip Morris moves to soften blow of California cigarette tax increase for smokers

'I'm Quitting': Impact of California's new $2-a-pack tax hike

As California's new cigarette tax jumps by $2 a pack on April 1, 2017, smokers and store owners say it'll take a hit on sales. For many, it's motivation to finally quit smoking.
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As California's new cigarette tax jumps by $2 a pack on April 1, 2017, smokers and store owners say it'll take a hit on sales. For many, it's motivation to finally quit smoking.

Health groups that pushed a successful $2 cigarette tax increase on the November ballot said raising prices decreases smoking rates.

Not if Philip Morris can help it.

In an email blast to California customers, the maker of Marlboro cigarettes offered three mobile coupons a week through June to offset the new tax increase that took effect earlier this month, as first reported by The New York Times. The subject line? “What Prop 56 Means for You.”

“This is typical industry behavior to try to cushion the impact of price and tax increases,” said Jim Knox, vice president of government relations in California for the American Cancer Society Cancer Action Network. “In this case, I don’t think it’s going to be effective.”

Knox cast doubt that the company could sustain the discounts long enough to impact the expected decline in smoking as a result of the measure.

Altria, the parent company of Philip Morris, did not respond to a request for comment.

The passage of the tobacco tax capped a difficult year in California for the industry.

Gov. Jerry Brown signed five anti-smoking bills last spring. The most damaging of the laws for big tobacco’s bottom line raised the legal age to buy tobacco from 18 to 21.

Before the bills passed, tobacco industry lobbyists threatened to corner the market on paid signature-gatherers to prevent proponents from qualifying the tobacco tax measure and other unrelated initiatives on the November ballot.

Instead the tobacco industry ended up dishing out $70.9 million in an unsuccessful bid to kill the tax increase. Altria, the parent of Philip Morris, and its affiliate businesses spent $44.4 million alone – nearly $2 million more than a broad coalition of health groups and labor unions spent to convince voters to approve the measure.

“There’s no question that raising prices reduces smoking,” said Stanton Glantz, the Truth Initiative Distinguished Professor of Tobacco Control at UC San Francisco. “That’s why the tobacco companies spend gobs and gobs of money fighting tobacco tax increases.”

Knox said his organization is exploring future state legislation to limit discounting on tobacco products.

Sonoma County became the first local government in the state to set a price floor for cigarettes last March. Mayor Bill de Blasio recently voiced support for a $13 minimum price in New York City.

Although many states have adopted similar laws, California does not currently dictate a minimum price for cigarettes.

Taryn Luna: 916-326-5545, @TarynLuna

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