Less smoking, but more tax revenue, state says

State Board of Equalization Chair John Chiang announced that BOE enforcement measures have produced an additional $93 million in cigarette and tobacco products tax collected in the past 20 months. Another $32 million in sales tax was also generated by the increased enforcement, Chiang said.

“While cigarette and tobacco consumption continues to decline, the tax receipts from those products are increasing,” said Chiang.

Cigarette and tobacco product tax increases historically have caused tax evasion to increase and consumption to decline, which sends tax revenues downward by 3 percent each year. But the recent enforcement efforts have helped to curb evasion and boost collections, officials said.

Tax receipts also were boosted by the introduction of a new, hightech cigarette tax stamp affixed to the bottom of cigarette packs to indicate the 87-cent excise tax was paid.

The state of California loses an estimated $292 million annually from cigarette tax evasion. Taxes collected on these products support hospital services, health education, breast cancer research and prevention and childhood development programs. Nearly $9 million of the new cigarette and tobacco excise tax dollars go to the state’s general fund, along with almost $20 million of the new sales tax revenue.