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If Tax Repeal Approved, We Would All Pay

August 20, 2008

By Anonymous

As the Portland Press Herald reported July 16, it appears likely that a referendum vote on the proposed tax on soda, wine and beer will occur.

The coalition responsible for seeking the referendum is framing the issue as one about tax burdens, using the specious argument that an increase of 11 cents for a liter of soda or 16 cents for a sixpack of beer would be the final straw that pushes Mainers over the brink and into poverty.

What the tax repeal folks don’t mention is that this tax may have a very positive effect on our collective cost burden in the long run.

INCENTIVE TO CUT CONSUMPTION

Besides providing health insurance funding for 18,000 low-income Mainers, this tax may have the added benefit of discouraging excess consumption of sugary beverages and alcohol. This would be beneficial to society, and taxpayers, on multiple levels.

Sugary beverages such as soda are a major culprit in the national obesity epidemic, providing hundreds of empty calories in each serving and virtually no nutritional value.

About two-thirds of the adult population of the United States is overweight or obese, and this collective weight problem, coupled with a sedentary lifestyle, is resulting in skyrocketing rates of diabetes and vascular disease.

These diseases are costing all of us billions of dollars per year in the form of high health care costs and lowered productivity. One of the reasons that sugary beverages play such a big role in the obesity epidemic may be that they are comparatively inexpensive, so people readily drink them without a thought to the health effects of doing so.

Raising taxes on beverages sweetened with high-fructose corn syrup is good public health policy, as it may tend to dampen demand for these products, which have a proven negative effect on health.

The same argument is true for alcohol. Although alcohol in moderation may not be a problem, there is plenty of evidence that the majority of alcohol-related deaths, disability and damage is attributable to drinkers who engage in occasional risky drinking, not those who are dependent on alcohol.

Adding 16 cents to the price of a sixpack, or 7 cents to a bottle of wine, may provide a small financial incentive to avoid excessive consumption. In fact, raising the price of alcohol has been shown to reduce the incidence of numerous problems, including underage drinking, drinking and driving crashes, and alcohol-related violence and injuries.

Furthermore, the tax on alcohol hasn’t been raised in 20 years, and because the tax on alcohol is calculated in cents per gallon sold rather than as a percentage of the price, the real value of the revenue generated by the tax has declined because of inflation.

SMALL PRICE FOR BETTER HEALTH

Unfortunately, the costs of the social services that are required to treat alcohol abuse have increased over the same period. This small tax could go a long way to reduce the estimated $430 million that Mainers spend on alcohol abuse damages each year.

The example of tobacco provides a good analogue to the benefits of raising taxes on products that are fundamentally corrosive to public health. Raising taxes on cigarettes tended to suppress demand for cigarettes, among youth in particular.

People like sweets and alcohol, and that’s fine. But raising taxes on these products to pay for health insurance is actually a step in the right direction, not the wrong one. If we raised taxes on the products that cause public health problems, perhaps those problems would tend to shrink.

A few cents per can or bottle would help fund the Dirigo Health Plan, and that’s a good thing. A few more cents per can or bottle might actually help improve all Mainers’ health – and that would be an even better thing.

— Special to the Press Herald

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