California Nonsmokers Poised to Vote Their Own Tax Increase, Says Nicotine Replacement Therapy Researcher

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California citizens, about 86 percent of whom are reportedly nonsmokers, will soon vote on the Coalition for a Healthy California’s Tobacco Tax Act of 2006 (Proposition 86). Information that is not disclosed by the ballot measure’s advocates indicates that nonsmokers who vote “Yes” on the Prop. 86 could be voting for $2.1 billion per year tax increase on themselves.

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California citizens, about 86 percent of whom are reportedly nonsmokers, will soon vote on the Coalition for a Healthy California’s Tobacco Tax Act of 2006 (Proposition 86). Information that is not disclosed by the ballot measure’s advocates indicates that nonsmokers who vote “Yes” on the Prop. 86 could be voting for $2.1 billion per year tax increase on themselves.

“The process by which this could occur is predictable,” says Norman E. Kjono, who has conducted research on Parity Pricing of Nicotine Replacement Therapy products since June 2000. Parity Pricing occurs when the cost of one product is changed in correspondence with the price for another. Parity Pricing is different from healthy market competition because paid advocacy is used to increase the price of a dominant market product such as cigarettes, thereby allowing distributors for competing products like nicotine patches and gums to increase their prices, too.

“With Nicotine Replacement Therapy products the consequences to consumers and taxpayers can be dramatic.” Kjono said. “For example,” he says, “between June 2000 and January 2006 state cigarette excise taxes increased by $12.00 per carton in Washington. The corresponding increase in the cost of Nicorette gum during the same period was $12.06 per box, on a per unit basis.”

Perhaps that is a bad deal for nicotine consumers, but how does that relate to tax increases on nonsmokers? “Corporate profit through paid tax advocacy is the link,” Kjono says. He adds, “One needs to look at the tax structure for both products to make the connection. Cigarettes are highly taxed, but there are no federal or state excise taxes on Nicotine Replacement Therapy products. Each box of nicotine gum, patches or lozenges sold therefore effectively becomes a transfer of state excise tax revenues to “Smoke Free” nicotine distributor bottom line profits.”

“Finally, consider the research paper “Toward a Comprehensive Long Term Nicotine Policy,” published by the journal Tobacco Control in 2005,” Kjono added. “That nicotine policy advocates replacing cigarettes with Nicotine Replacement Therapy products. Ballot measures like Prop. 86 are an integral part of that policy. The more successful that policy, the faster state revenue to fund programs created by Prop. 86 evaporate because it becomes corporate bottom line profits.”

“So who is ultimately left holding the bag for $2.1 billion in state programs that Prop 86 creates?” Kjono asks. “All California taxpayers, including 86 percent of whom do not smoke,” he concluded.

A current article by Mr. Kjono on this subject, “California Nonsmokers Poised to Vote Their Own Tax Increase,” has been published online at Cigarexperience.com. The link to that article is:

http://www.cigarexperience.com/ca_tax_norman_kjono_1.htm

Bio and Background Information Norman E. Kjono:

Mr. Kjono has researched and written about tobacco control for the past twelve years. He is a former columnist and board member for http://www.forces.org. Mr. Kjono’s commentary about youth smoking, “Let’s Really Save the Kids” was republished in the Luncent Press/Greenhaven Books 2000 anthology “Teen Smoking” under the title “A Better Way to Talk To Teens About Smoking.” His works on this subject have also been published in numerous trade journals, including the Los Angeles Daily Journal, plus Chief Engineer and Heating/Piping/Airconditioning magazines. In addition, Mr. Kjono has testified before the Washington legislature and the Metropolitan King County Council, as well as provided reports to the Washington Department of Revenue and Office of the Attorney General. He has also appeared on BBC London, Fox News, CNN, and many radio talk shows concerning tobacco control subjects.

Mr. Kjono’s current project is a book, titled “Trapped in the Triangle: States at the Precipice,” about the long term consequences of tobacco control advocacy on state budgets and fiscal responsibility.

Additional information, including a research report concerning Parity Pricing as submitted to the Washington Department of Revenue, is available on request.

Contact:

Norman E. Kjono, Author

(425) 497-8187

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