The Legislative Analyst’s Office has just issued the following report:
The 2015-16 Budget: Cigarette Tax and Licensing Programs
California imposes excise taxes on cigarettes and on other tobacco products such as cigars and chewing tobacco. Most revenue from these taxes goes to special funds established by ballot measures. The state also licenses tobacco sellers and distributors.
The State Board of Equalization (BOE) administers the tobacco excise tax and licensing programs. Recently, there has been considerable legislative interest in these programs’ costs. The Legislature faces two key decisions: (1) how to pay for BOE’s cigarette and tobacco programs, and (2) how much to spend on them.
This report recommends that the state use excise tax revenue to pay for excise tax administration but not for the tobacco licensing program. To address the imbalance between the licensing program’s costs and revenue, we further recommend the Legislature (1) temporarily increase fees on tobacco retailers, wholesalers, and distributors, and (2) direct BOE and the California Department of Justice to explore options to reduce the program’s costs by promoting electronic filing of schedules and tax returns.
This report is available using the following link: http://lao.ca.gov/Publications/Detail/3239
