California Prop 56 is a new measure that would increase cigarette taxes in the state by $2.
The new tax on cigarettes could quickly take the state from offering some of the cheapest tobacco taxes to being in the top 10 most expensive states in the U.S. The current tax on cigarettes in California is 87 cents and California Prop 56 would bring it up to $2.87.
Tobacco companies, including Altria Group Inc (NYSE:MO) and Reynolds American, Inc. (NYSE:RAI), are funneling money into a campaign to fight California Prop 56. $35.6 million has already been donated to the campaign by tobacco companies. This is twice what supporters of the new tax have donated and makes up the majority of the campaign’s $37.1 million in donations.
California Prop 56 wouldn’t just increase the price of cigarettes. The state also considers e-cigarettes as cigarettes and they would be hit by the tax increase as well. Money from the tax will be used to fund cancer treatment and help prevent smoking. The increased tax would also likely push users away from the products, reports Bloomberg.
“Make no mistake, Proposition 56 will not divert a dime away from schools,” Tom Torlakson, California’s Superintendent of Public Instruction, told PolitiFact while speaking about claims that the tax would cheat schools out of money. “Rather, it will raise revenues for school based tobacco prevention and intervention programs.”
Voting “Yes” on California Prop 56 supports increasing the cigarette tax in the state by $2. Voting no stands against the tax increase on tobacco and e-cigarette products. You can learn more about the issue at this link.
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