California Cigarette Tax Defeated by $47 Million Tobacco Pitch

California voters rejected a ballot measure to raise cigarette taxes by $1 a pack to discourage smoking and pay for cancer research, delivering a victory to the tobacco industry, which led a $46.8 million campaign to kill the measure.

Proposition 29 failed 50.3 percent to 49.7 percent, the Associated Press said. The measure was losing by about 28,000 votes of 5 million cast, with about 111,000 uncounted, the secretary of state said today. That was too few for the “yes” side to pull ahead, AP said.

The plan to raise the tax to $1.87 a pack starting in October pitted Lance Armstrong, the cycling champion and cancer survivor, and groups such as the American Cancer Society against the tobacco industry, led by Altria Group Inc. (MO) and Reynolds American Inc. (RAI)

The industry led the $46.8 million in campaign contributions to defeat the ballot measure. Two-thirds came from Altria, based in Richmond, Virginia, which contributed $31.3 million through its Philip Morris USA, John Middleton Co. and U.S. Smokeless Tobacco units, according to data compiled by MapLight, a nonpartisan research organization based in Berkeley.

Reynolds American’s R.J. Reynolds Tobacco, American Snuff and Santa Fe Natural Tobacco units gave $14.1 million, according to MapLight data. Reynolds, based in Winston-Salem, North Carolina, announced in March that it plans to cut 10 percent of its U.S. workforce by the end of 2014 as demand for cigarettes wanes.

Opponents said the tax wouldn’t allocate funds to pay down the state’s budget deficit and didn’t require the tax revenue to be spent on research in California.

Supporters, who argued the measure would keep kids from smoking and save lives, raised about $12.3 million, with $8.5 million coming from the American Cancer Society, according to MapLight.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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