California Tobacco Tax Increase Qualifies for November Ballot

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Voters will decide the future of a proposed tobacco tax, as on Thursday California Secretary of State Alex Padilla announced that Proposition 56 qualified for the ballot.

The proposition seeks a $2 per pack increase in the tax on cigarettes, but because California bases its tax rate for other tobacco products (OTP) such as premium cigars on the ratio of the total cigarette tax to the weighted average wholesale cost of one cigarette, raising the tax would significantly increase that ratio.

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Currently, California’s OTP tax sits at 28.13 percent of the wholesale cost, a number arrived at by dividing the total taxes on a single cigarette—6.85 cents—by the weighted average wholesale cost of one cigarette—24.35 cents. Adding that extra dime to the cigarette tax would result in a new ratio of 69.2 percent, meaning that a cigar with an MSRP of $9.50 would go from costing an estimated $12.17 before state and local sales taxes to $16.07, again before sales taxes.

The petition needed 585,407 registered voters to sign it in order to appear on the November ballot; according to the Secretary of State’s office random sample report, the petition has garnered 682,346 valid signatures.

Proposition 56 is being supported by noted political contributor and billionaire Tom Steyer, a former hedge-fund manager and environmental activist who is also considered a possible candidate for governor in 2018. Steyer contributed $1 million to the signature gathering process.

(Featured image by Rich Niewiroski Jr.http://www.projectrich.com/gallery, CC BY 2.5)

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Patrick Lagreid
About the author

I strive to capture the essence of a cigar and the people behind them in my work – every cigar you light up is the culmination of the work of countless people and often represents generations of struggle and stories. For me, it’s about so much more than the cigar – it’s about the story behind it, the experience of enjoying the work of artisans and the way that a good cigar can bring people together. In addition to my work with halfwheel, I’m the public address announcer for the Colorado Rockies and Arizona Diamondbacks during spring training, as well as for the Salt River Rafters of the Arizona Fall League, the WNBA's Phoenix Mercury and the Arizona Rattlers of the Indoor Football League. I also work in a number of roles for MLB.com, plus I'm a voice over artist. I previously covered the Phoenix and national cigar scene for Examiner.com, and was an editor for Cigar Snob magazine.

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