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This fall, new push against Big Tobacco

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"We said, what is the amount that actually has an impact?" says Kris Deutschman, communications director for Proposition 86, the name of the ballot initiative. According to the American Lung Association in California, 200 underage kids begin to smoke in the state a day, and there are currently 200,000 underage smokers. "We think between the size of the increase and the use of the funds, it will prevent 700,000 kids in California from starting to smoke," says Ms. Deutschman.

But those opposed to the new tax, a combination of tobacco interests and business groups, have already been hitting the airwaves. John Singleton, a spokesman for R.J. Reynolds Tobacco in Winston-Salem, N.C., says raising taxes would "create all kinds of problems for retailers." It would "exacerbate" the smuggling problem, he says, and perhaps give extra money to those raising money for terrorism.

Terrorism and smuggling are "red herrings," replies Paul Knepprath, a vice president at the American Lung Association of California in Sacramento. "We already have the infrastructure to combat smuggling, and 70 percent of people buy their cigarettes at the most expensive place – the convenience store."

Reynolds, which has said it will spend $40 million fighting the ballot initiatives, is bankrolling opposition to proposed smoking restrictions in Arizona and Ohio. The company's strategy includes a competing proposal that sounds like health measures but allows smoking in bars and other places. "One of the few places we can interact with adults who smoke is in bars and nightclubs where typically the owner can set the smoking policy," says Mr. Singleton.

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