http://www.sacbee.com/2010/07/28/2919217/plummeting-cigarette-sales-cut.htmlPlummeting cigarette sales cut California tax revenues
By Bobby Caina Calvan
bcalvan@sacbee.com Last Modified: Wednesday, Jul. 28, 2010 - 12:08 am
Cigarette sales in California plunged to their lowest level in a decade last year as smokers were squeezed by new taxes and restrictions on where they could light up.
While tobacco use has been steadily declining, the 8.1 percent sales drop was the largest year-over-year decline since 2000, according to the state Board of Equalization.
The number of cigarette packs sold in the state fell to 972 million – down from from 2.8 billion in 1980.
State officials said higher taxes drove more people to kick the habit. Last year, the federal government increased the per-pack tax on cigarettes by 62 cents, bringing the levy to $1.01 a pack.
In California, a pack of smokes now costs an average of $5.09.
"As smokers go to the checkout counter and pay that higher price, they've reduced their smoking," said Anita Gore, a spokeswoman for the state Board of Equalization.
Certainly, the drop is good news for public health. Smoking is tied to a number of deadly ailments, including heart disease, cancer and emphysema.
According to state studies, the lifetime health cost for a smoker is $16,000 more than a nonsmoker.
But for the state, the decline in smoking also means $74 million in tax revenues have disappeared like a puff of smoke, leaving health programs that rely on cigarette taxes to look for other ways to pay for services.
In all, the state collected $839 million in cigarette tax revenues during the just-completed fiscal year, compared with $913 million the year before.
"It's definitely a bit of good news and bad news for us," said Diane Levin, chief deputy director of First 5 California, which gets most of its funding from state cigarette taxes to pay for anti-smoking education services and other programs that promote healthy living among Californians with young children.
"Declining revenue isn't a new issue for us. We've been expecting it, and we've been planning for it," she said. "We're having to strategize to do more with less, to concentrate our focus in these tough times."
Still, it's a "double slap" – a decline in tax revenue and a state budget that is struggling to fund health services, said Robert Phillips, director of health and human services for the California Endowment, a private health advocacy foundation.
While cigarette sales have declined, "there's still a lot of work to do" to vanquish cigarettes from the state, Phillips said.
The availability of cheaper generic cigarettes at discount retailers and lower online prices continue to feed the appetite of those who can't kick their habit.
At Joe's Discount Cigarettes in south Sacramento, fewer customers are buying expensive name-brand cigarettes, instead opting for generic ones, said the shop's owner, Joe Ilagan.
"If you don't have the money, you can always buy generics," which cost up to $2 less a pack. "But if you're a die-hard fan of Marlboros, you're still going to buy 'em," Ilagan said.
The figures released by the Board of Equalization did not include Internet sales from out-of-state cigarette vendors.
By law, sellers are supposed to inform the state of cigarettes purchased online so state officials can collect taxes on the sales.
Tax revenues from online sales have also declined in recent years, Gore said. In 2007, the state collected $2.2 million in tax revenue from Internet sales. A year later, that amount fell to $960,000. In 2009, the tally further dropped, to $785,000.
While it wasn't included in the analysis released Tuesday, "the decline in (online) revenues indicates a potential decline in consumption" of cigarettes, said Gore, the Board of Equalization spokeswoman.
Over the years, the number of smokers in California has fallen dramatically, as taxes increased and communities placed greater restrictions on where people can smoke.
The state now bans smoking in workplaces, restaurants, bars and other indoor places, while an increasing number of communities ban smoking in outdoor spaces such as parks and beaches.
The result, state officials said, is a healthier California.
Last year, just 13 percent of the state's population smoked – down from nearly 23 percent two decades earlier, according to the California Department of Public Health. Only Utah has a smaller percentage of smokers.
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