Critics of Maryland's tobacco tax have long predicted that it would lead to unintended consequences, specifically massive smuggling as bootleggers trucked crates of contraband smokes, shortchanged the government and pocketed the difference. A news release this week from the Maryland U.S. Attorney's office suggests there's some truth to that: Two Maryland men were sentenced on Tuesday to prison in a massive cigarette smuggling conspiracy that evaded some $2.5 million in taxes.
The thing is, they were smuggling cigarettes from Maryland, not into it. Maryland's $2 a pack levy may be high compared to Virginia's absurd 30 cents, but the difference is still less than between Maryland's rate and the $4.35 in taxes smokers in New York state pay on each pack — not to mention the extra $1.50 New York City charges. The defendants in this case were buying smokes in Baltimore County (from an undercover FBI agent, as it turned out) and trucking them up to Brooklyn, where co-conspirators sold them at a profit to others, who in turn sold them on the streets. (Yes, there is enough money involved to support several layers of middlemen.)
Maryland's comptroller's office, which enforces cigarette tax laws, has reported a quadrupling of the number of packs it seizes in recent years, but the big spike came not when Maryland doubled its tobacco tax to $2 a pack but when New York went to $4.35 in 2010. Comptroller Peter Franchot's agents and local law enforcement may be finding more cartons of unstamped smokes in the trunks of cars stopped along the highway, but that doesn't mean Maryland was their final destination — not when they can be clearing an extra 70 cents a pack in New Jersey, $1.51 in Massachusetts, $1.65 in Connecticut, $1.75 in Rhode Island, or the big prize in the Big Apple, $3.85 in New York City.
Meanwhile, though, the intended consequences of Maryland's cigarette tax increases have come to fruition just as predicted. Since the state enacted the first in a series of cigarette tax increases in 1999, the adult smoking rate has dropped in Maryland by about a third, far outpacing the national decline during that time, according to the Centers for Disease Control. Since the last cigarette tax increase in Maryland, youth smoking rates here have dropped about 29 percent, according to the CDC, again a faster drop than the national average.
With Gov. Larry Hogan looking for ways to cut taxes, not increase them, now might not seem like the obvious time for the legislature to expend much energy considering advocates' proposal to increase Maryland's tobacco tax by another $1 per pack, but we hope they do. Last year's version of the legislation, which also would have raised levies on pipe tobacco, chewing tobacco, snuff and certain other products, was projected to raise about $90 million a year in revenue, but that is almost beside the point. The Campaign for Tobacco Free Kids and the American Cancer Society's Cancer Action Network estimate that a $1 a pack increase in Maryland's tax would cut youth smoking by another 11 percent. Tens of thousands of adult smokers would quit, and the state would save millions every year in health costs from lung cancer, heart attacks, strokes and smoking-affected pregnancies.
In the past, backers have sought to tie tobacco tax increases to greater funding for health initiatives — last year's version dedicated an extra $10 million a year to smoking cessation programs, for example — and polling conducted last year on behalf of the Maryland Citizens Health Initiative by Annapolis-based OpinionWorks found 71 percent support for that idea. Even a majority of Republicans backed it. But the connection between increasing the price of cigarettes and the associated public health benefits is so well understood by the public that support was nearly as strong regardless of what the money would be used for — 67 percent supported the idea, 59 percent strongly, even without the promise that the money would go to a particular cause.
Perhaps that explains why tobacco tax increases have become increasingly palatable to Republican governors and legislators. Last year, Louisiana Gov. Bobby Jindal proposed, and the state's GOP-led legislature approved, a 50-cent per pack tax hike to help cover a budget shortfall. Kansas Gov. Sam Brownback, perhaps the most anti-tax governor in the country, proposed a $1.50 per pack cigarette tax increase last year to help balance the budget, though he also pitched it as a public health measure. The Republican legislature there eventually approved an extra 50 cents a pack. Alabama Gov. Robert Bentley proposed an 82.5-cent cigarette tax increase, but he and the Republican legislature settled on 25 cents a pack. Nevada Gov. Brian Sandoval and the Republican legislature approved a $1 a pack increase last year to fund reforms to the state's K-12 education system. Ohio Gov. John Kasich proposed a $1 a pack increase last year to help pay for income tax cuts; the Republican legislature approved 35 cents. Even New Jersey Gov. Chris Christie, who has been lauded by Americans for Tax Reform President Grover Norquist as having "vetoed more tax hikes than any other governor in modern American history," proposed a new tax on e-cigarettes in 2014.
We don't expect Governor Hogan to follow those Republicans' lead and become a champion of higher tobacco taxes, but we hope he and the Democratic leaders in the legislature will keep an open mind on the issue. Use the revenue to shore up the state pension system, pay for aid to Baltimore, support public health or offset other tax cuts. Whatever lawmakers decide to do with the money, they would be saving lives.