As lawmakers in Annapolis search for help paying for the educational reform recommendations of the Kirwan Commission, all sorts of possible tax increases (and reductions in tax credits) have been tossed around. Many are worthy of serious consideration. Not simply because they could help the state pay for vital school upgrades like expanded prekindergarten, tougher teacher standards (and higher pay to justify them), and greater support for special needs students, but because they are sensible changes to the state’s tax structure. Applying the sales tax to certain services instead of only goods, for example, or raising income taxes for people who work in Maryland but live outside the state are sensible reforms whether or not they lead to better schools. And in that category, put the tax that might do more for the health of Marylanders than most any single thing government can do — while simultaneously going a long way to lifting the quality of public education in this state.
The Maryland General Assembly needs to double the state tax on cigarettes from $2 a pack to $4 while extending similar tax increases to other forms of tobacco.
Doubling the tax may sound dramatic, but it’s been done before. Maryland doubled the tax on cigarettes from $1 to $2 in 2008. The impact of that choice was, indeed, dramatic but to the public’s benefit, not its detriment. As detailed in a 2018 Abell Foundation report by researchers from the Johns Hopkins Bloomberg School of Public Health, retail cigarette sales declined 30% in Maryland with teen smoking falling by an even greater margin. Given that smoking is a leading cause of death, it’s no stretch to call the tobacco tax life-saving, not just in fewer cancer deaths but in fewer fatalities from heart and lung diseases that are associated with cigarette use. Each year, about 7,500 Marylanders die from smoking-related disease, according to the Centers for Disease Control and Prevention.
Might such a high tobacco tax cause harm to the economy and hardship to low-income smokers? That hasn’t been the experience in other states. Even if lawmakers were to double the tax overnight, Maryland still would not have the highest cigarette tax in the nation. At the moment, that honor goes to New York and Connecticut at $4.35 per pack. And those are just state taxes. Cities and counties sometimes pile on as well. In major cities like New York and Chicago, it’s not uncommon for the combined taxes to reach $6 or more. And so what if Maryland becomes a high tobacco tax state? Would it offend the sensibilities of R.J. Reynolds? Would we lose a non-existent contract to produce cigarette paper? Would we be considered business unfriendly to oncologists?
Tax opponents like to argue that tobacco taxes are regressive, and that’s true. If you don’t make a lot of money, an $8 pack of cigarettes is a substantial hardship. But that’s the point. If it causes people to stop smoking and not spend a dime on tobacco, that’s the best possible outcome. That makes low-income smokers the greatest beneficiaries of the policy, not its victims. And here’s another valid criticism: Tobacco taxes are an unreliable way to finance anything given that revenues decline as consumption of tobacco declines. We think we can live with that. Kirwan can’t be chiefly financed with sin taxes, but that doesn’t mean such revenue can’t play a role.
Finally, let’s look at the numbers. This coming year, tobacco taxes are expected to raise $341.6 million. Doubling that tax means another $300 million give or take (as rising costs lower demand). Still, that’s a major step toward meeting Kirwan obligations — with the added benefit of saving lives. And if members of the anti-tax crowd think Marylanders will revolt over higher tobacco taxes, they’d better think again. Voters don’t punish legislators who raise tobacco taxes, they reward them. Just ask Martin O’Malley, who cruised to reelection after the last tobacco tax hike. Higher cigarette taxes can’t fully fund Kirwan, they can’t even produce half of what’s needed. But the tobacco tax ought to be the first step when it’s time to raise revenue for schools. It’s too logical to be overlooked.