Boost Md. taxes to improve public health?

According to a new report commissioned by the Abell Foundation, the percentage of Maryland high school students who reported consuming alcohol at least once in the preceding 30 days decreased from 35 percent during the same period in 2011 to 26 percent in 2015 — a reduction of 26 percent. In comparison, there was a 17 percent reduction among students nationwide over the same time-period.

So, what’s to account for the steeper reduction in underage drinking in Maryland? The answer might surprise you: tax policies.

In 2007, the state legislature increased the excise tax on a pack of 11 to 20 cigarettes from $1 to $2 (effective Jan. 1, 2008). And it increased the sales and use tax rate for alcoholic beverages from 6 percent to 9 percent, effective July 1, 2011. Both proposals were, in large part, driven by the significant public health impacts and costs these products have on Marylanders.

The Abell Foundation asked researchers at the Johns Hopkins Bloomberg School of Public Health to evaluate the legislation.

They found that, following the alcohol sales tax increase, binge drinking by Maryland adults decreased by 17 percent between 2011 and 2016, compared to just a 6 percent reduction nationally. And among Maryland high school students, between 2011 and 2015, there was a 26 percent reduction in the percentage of students who reported consuming alcohol in the preceding 30 day period, a 28 percent reduction in binge drinking and a 31 percent reduction in students riding in a vehicle operated by a driver who had been drinking alcohol.

Likewise, following the $1 per pack cigarette tax increase, smoking by Maryland adults decreased by 26 percent between 2011 and 2016. Among Maryland high school students, there was a 47 percent reduction in students who reported smoking a cigarette in the preceding 30 days, as well as a decline in frequent smoking between 2007 and 2015.

The report concludes that, to maximize positive public health outcomes, the state should:

1.) Consider taxes an effective policy strategy to improve the public’s health;

2.) Monitor the public health impacts of tax policy;

3.) Ensure transparency for bills that generate revenues;

4) And employ effective advocacy strategies when promoting public health policy initiatives.

While perhaps not revolutionary findings, the lessons are clear for lawmakers looking to enact policies to improve public health and at the same time develop a revenue source to address public health challenges or provide general funds for other statewide priorities.

According to the comptroller, alcohol tax revenue is projected to increase by 3.5 percent annually and will bring in an estimated $306 million in fiscal year 2018. The legislation that increased the alcohol sales tax mandated certain appropriations for the following fiscal year.

For fiscal year 2012, the law required that $15 million be appropriated to the Waiting List Equity Fund for the Developmental Disabilities Administration and $47.5 million be appropriated to the Public School Construction Financing Fund. While not specified in the law, the approximately $70 million per year raised by the 2011 alcohol sales tax increase has been budgeted for important public health needs, like programs to help people with drug and alcohol addiction and developmental disabilities and mental health issues.

The tobacco tax increase legislation did not specifically allocate the revenue for public health purposes, but the governor and state leaders agreed that the revenue would be used to support health care expansion through the Working Families and Small Business Health Care Coverage Act of 2007, which expanded Medicaid coverage to adults making less than 116 percent of the federal poverty level — about 100,000 Marylanders.

Talk of new revenue sources is always difficult for state and local lawmakers. But in Maryland there is a model to use tax policy to effectively drive public health outcomes. With any change in tax policy, transparency is paramount so citizens understand the intended policy objective and how the funds are being allocated. But it should not be hard to convince Marylanders that more can be done on any number of public health issues from rising cost of health care, to the opioid epidemic and the persistence of smokeless tobacco products.

Robert C. Embry Jr. is president of the Abell Foundation. His email is embry@abell.org.

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