State of tobacco: Can Maryland kick smoking without taxes?

Maryland lawmakers met Wednesday afternoon to consider legislation that would raise the state tax on cigarettes and other tobacco products, while also mandating an additional $10 million in state spending on tobacco control and cessation programs beginning in 2017.

The legislation is not expected to win a signature from Gov. Larry Hogan, however.


"With regard to a tax hike, Governor Hogan has been very clear about his position on tax increases," Hogan's press secretary, Shareese Churchill, wrote in an email.

House Bill 71, if passed, would raise the tax on cigarettes from $2 to $3 per pack, while increasing the tax on other tobacco products from the present 30 percent of wholesale price to 74 percent of wholesale or to a specified minimum, whichever is greater, according to a Department of Legislative Services analysis. It is projected that the new taxes would raise an additional $95.2 million in fiscal year 2017, funds that would be used to enhance tobacco use prevention and cessation programs.


The bill, which was discussed Wednesday in a legislative hearing, would also require the state to, beginning in FY18, increase the amount of money spent on tobacco use prevention and cessation programs to $21 million annually, the funding level that existed prior to 2010 when financial difficulties prompted reductions in spending to $6 million per year in FY11 and FY12. Funding was increased to $10 million beginning in FY13 and was just shy of $11 million in FY16, but remains less than the $48 million recommended by the U.S. Centers for Disease Control and Prevention.

Senate Bill 514, similar but not identical legislation sponsored by Montgomery County Sen. Richard Madaleno Jr., D-District 18, is scheduled for a hearing in the Senate on Wednesday, Feb. 24.

Similar bills, HB108 and SB37, were introduced in the 2015 legislative session with both dying in committee.

Proponents: higher tax equals fewer smokers


Over the past 15 years, Maryland has made significant progress in reducing smoking rates: The adult smoking rate fell to just below 15 percent in 2014, a 29 percent decrease from the 20.5 percent rate in 2000, according to Department of Health and Mental Hygiene statistics. The youth smoking rate fell to 8.2 percent, according to DHMH, down from 23 percent in 2000.

Yet those successes were linked to previous increases in tobacco taxes — in 1999 and 2007 — and spending on tobacco use prevention and control programs, according to Montgomery County Del. Eric Luedtke, D-District 14, a sponsor of HB71. He argues that raising tobacco taxes would build on Maryland's successes.

"We've made progress that's undeniable, but we still have lot more work to do," Luedtke said. "We are still underfunding our tobacco prevention programs, drastically, way below the CDC-recommended level, and we still have far too many teenagers that are starting to smoke."

Luedtke said he smoked for 15 years and knows how difficult it can be to quit; that's why keeping teens from smoking in the first place is a priority for him.

"When I started smoking, I could go to a convenience store down the street from my house and get a pack for $1.50, and now it's $7.50," he said. "That's one of the major factors in keeping kids away from cigarettes in the first place."

That's also the view of the American Lung Association, according to Deborah Brown, president and CEO of the American Lung Association of the Mid-Atlantic.

"For every 10-percent increase in the price of cigarettes, you reduce consumption by about 7 percent," she said. "We know we could make a significant difference by increasing the tobacco tax."

A complication of a tobacco tax meant to discourage people from becoming addicted, however, is that some people who are already addicted will find themselves paying more than they can afford for tobacco, unable to quit. Those people are most often the most poor, according to Del. Susan Krebs, R-District 5, which is in Carroll County.

"It's a very regressive tax. The people that are going to smoke are going to smoke anyway," she said. "We need to educate people as to why it's not good for you, rather than just taxing poor people to death on something that they do."

Luedtke does not dispute the claim that a tobacco tax increase is regressive. In fact, in some sense, that is the point of the tax, he said.

"It is a regressive tax, but so is any user fee," he said. "The question is why should you, as a nonsmoker, be paying to cover the health care costs of people that choose to smoke? The answer is you shouldn't be — people should pay their own way."

Failing grades

The legislative hearing for HB71 was held on the heels of the annual State of Tobacco Control report, which was published by the American Lung Association on Feb. 3 and gives each of the 50 states a four-measure report card on how well they do in preventing and reducing tobacco use. Maryland received the same four grades as in 2015: An A for smoke-free air laws, two D grades — one for what the ALA considers low taxes on tobacco products and the other for impeded access to cessation services — and an F on funding tobacco prevention and control programs.

Such programs are funded through the Cigarette Restitution Fund, which was set up in 2000 to hold and distribute state tobacco revenue, particularly payments made to the state by tobacco companies per the 1998 Tobacco Master Settlement Agreement. Between 1998 and 2014, Maryland received more than $2 billion in settlement payments, according to the Campaign for Tobacco Free Kids, funds intended to help reduce the impact of tobacco-related disease in the state.

Brown said she would like to see Maryland spend the CDC-recommended $48 million on tobacco programs — still a small percentage of the $519 million the state collects in total tobacco related revenue — but the $21 million mandated by HB71, should it pass, would at least be a good start.

"It would start to put us on the right track, she said. "For every dollar that we invest, the tobacco industry is investing $15.4 into their marketing. That's hard to compete with, and that's why it's important that we put more than $10.9 million into prevention and cessation."

Decreased funding from the Cigarette Restitution Fund has had measurable consequences in recent years.

Carroll County Health Department officials previously told the Carroll County Times that the department had to suspend some smoking cessation programs because of reduced program funding in 2010, and then again in 2012 and 2013, the department could not afford to conduct checks to ensure that retailers were not selling tobacco to minors.

Other counties might have had similar budgetary constraints. Maryland was found to be out of compliance with the federal Synar Amendment tobacco law in FY14 and FY15, when more than 20 percent of retailers checked were found to have sold tobacco to minors. To avoid losing federal substance abuse block grants, the state agreed to provide extra funding for programs to bring the state back into compliance in FY16.

"[DHMH] has worked tirelessly over the past two years to educate retailers on this issue in an industry-education campaign, www.notobaccosalestominors.com, that involved a partnership with local health departments, retailers and the Comptroller's Office," DHMH spokesman Christopher Garrett wrote in an email. "The result was a change in retailers' behavior in complying with the law that showed noncompliant-retailer rates dropping from 31.4 percent to 13.8 percent in just one year."


To build on that success, Hogan has allocated another $2 million in the FY17 budget to continue the effort to reduce illegal tobacco sales to minors, according to Garrett.


At the same time, Brown questioned why, with the success of a little extra spending, the state would not consider spending more Cigarette Restitution Fund money, given that the fund was intended for such purposes.

"Maryland spends almost $2.7 billion on health care costs due to smoking, and so I think at some point in time someone needs to step back and say, 'That's an awful lot of money to spend on something we know is preventable,' " she said. "If we invest in prevention and cessation at the CDC level, let's just say, of $48 million, we may see a huge return and we might see that number in health care costs start to reduce."

Diverted funds

Krebs is not a fan of the idea of raising tobacco taxes, but she does believe it might be time — if not long past time — to spend more Cigarette Restitution Fund money on tobacco use prevention and cessation.

"This restitution money was put in place for a purpose years ago by the courts many, many years ago, and the money has been diverted, and diverted," she said. "I have always been on record as saying we need to spend the money for what it was intended."

Actually redirecting that money, however, is a task Krebs recognizes as a serious challenge. When the budget got tight after the 2008 financial meltdown, Cigarette Restitution Fund money was called on to plug holes in the budget — holes, she said, that were created, in part, by spending mandated by the legislature. She is not sure another spending mandate, such as in HB71, is the way to go.

"What we need to do is look at what programs are out there, what's working and what revenues do we need to make those programs be successful," she said.

Maryland does have some successful programs in place at current funding levels. In addition to the DHMH industry-education campaign bringing down the numbers of illegal tobacco sales to minors, 2016 marks the 10th anniversary of the Maryland Tobacco Quitline — available at 800-QUIT-NOW and www.smokingstopshere.com, according to Garrett.

"The Quitline has received more than 80,000 calls from Marylanders since its launch in 2006; more than 9,000 residents were served in 2015 alone," Garrett wrote in an email. "Quitline has greatly enhanced the availability of free nicotine replacement therapy — offering nicotine patches, nicotine gum or both options to be used concurrently — with a 12-week supply sent directly to participants' homes free of charge."

Hogan understands the benefits of reducing smoking and tobacco use in Maryland, according to Churchill, but is willing to see where current programs — and current funding — can take us before considering raising tobacco taxes.

"New and innovative measures like the Department of Health and Mental Hygiene's' partnership with the Comptroller's Office and public awareness campaigns provide much-needed education to retailers and the general public," she wrote in an email. "The state will continue to provide support to help retailers comply with the laws banning underage tobacco purchases and to help Marylanders choose to quit or never start smoking."