Alcohol tax hike: one penny that saves lives
Last week in the Maryland Senate and this week in the House of Delegates lawmakers were treated to a parade of bar and liquor store owners and distributors warning them that a proposal to spend $14-to-$22 million more a year to improve access to health care in disadvantaged communities would either severely hurt them or, in some cases, drive them out of business entirely. Why? Because the legislation in question, the Maryland Health Equity Resource Act, would be financed by a 1 cent increase this fall in Maryland’s alcohol sales tax. No longer would buyers of alcoholic beverages pay 9 cents on the dollar; it would rise to 10 cents — although for restaurants and bars, the higher tax would not kick in until October of 2023. That penny, many decried, would be the proverbial tipping point for their strained hospitality industry.
This much the opponents of the legislation had right: These are, indeed, tough times for bars and restaurants although apparently pretty good for liquor outlets catering to the shut-in life. The COVID-19 pandemic has been brutal for indoor entertainment for obvious reasons. And we have cheered as government, at the federal, state and local level, have taken measures to assist many of these small business owners and their laid off employees. Loans and grants, penalty-free suspension of certain tax payments, relief payments, you name it and most people support a taxpayer-funded assist to keep these vital businesses going through a crisis not of their making. Nor are we surprised when any industry reflexively opposes a tax that applies only to them. Newspaper owners have been known to do the same.
Still, there is something rather repugnant about sellers of alcohol testifying in front of legislative committees of the dire consequences of a penny tax. A bar that charges $5 for a beer might, in two years, have to raise the price to $5.05. The humanity. Nine years ago, Maryland raised the same tax from 6 cents on the dollar to the current 9 cents, a far greater increase. And did it lead to mass bankruptcies? Not exactly. A 2018 Abell Foundation report revealed the tax hike’s true consequences: a 17% reduction in adult binge drinking, a 26% reduction in student drinking, and a nearly one-third reduction in teens self-reporting riding in a vehicle where the driver was under the influence. Oh, and yes, per capita alcohol consumption declined modestly, but from a wellness standpoint that’s not a bad thing and it was not enough to offset substantially higher tax revenue.
Selling alcohol isn’t the same as selling groceries or bicycles or tax accounting services. There are adverse effects from excess consumption and not just to the individual but more broadly to the community. So making the product a bit more expensive is reasonable even if it deters consumption, which is part of its purpose. And just as in 2011, the legislation’s authors
have a target in mind: the District of Columbia already charges 10 cents. This would match. And delaying the increase for two years also makes perfect sense as it puts the pandemic well behind us.
But there’s something more important at stake than simply discouraging young people from drinking. What the legislation seeks to do — in a highly targeted way — is to bridge disparities in access to health care. Today, African Americans, particularly those living in economically distressed neighborhoods, are far more likely to die of heart disease and many other treatable ailments than others. The bill would have the state health department identify underserved communities and provide economic incentives for medical professionals (income tax credits, loan repayment assistance, etc.) to treat people in such a designated “health resource equity community.” Primary care, drug treatment, dental checkups, any or all might be supported.
To call this measure lifesaving is simply to acknowledge reality. And it’s made all the more effective by simultaneously discouraging excess drinking, particularly for young people who tend to be the most price-sensitive consumers. Judging from its first two committee hearings, the bill has broad support. Might some bars see a decline in consumption?
Maybe from the true penny-pinchers. But, again, that was not the experience of the far more significant increase of nine years ago. The Centers for Disease Control and Prevention estimates that excess alcohol consumption causes 95,000 deaths and a collective 2.8 million potential years lost annually (to the extent it contributes to chronic illnesses that will take your life early). Any tax policy that ignores this sad reality would be irresponsible, indeed.