Taxes

Tobacco tax increase would reduce revenue, hurt the poor and undermine safe alternatives

on

The 100 percent increase in taxes on all tobacco products as proposed recently in the State legislature (LD 1423) doubles down on Maine’s regressive and all-inclusive tobacco tax structure, puts fuel on the State’s already flourishing illicit tobacco trade, and, perhaps most importantly, ignores the science on true tobacco harm reduction. 

The bill ostensibly seeks to decrease adult cigarette smoking and increase funding for tobacco control and heath disparities research. Unfortunately, State law mandates that when cigarette taxes are increased, taxes on all other tobacco products, including moist snuff and vapor products – which are substantially safer than cigarettes – must also be increased by the same percentage. 

So, the 100 percent increase in the cigarette tax means the taxes on both moist snuff (oral tobacco) and vapor products are also doubled. This makes the tax on all e-cigarette or vapor products 86 percent of their wholesale cost: the second highest tax on nicotine vapor products in the country. And despite the magnitude of this tax increase, it is unclear whether State legislators have considered its sweeping impact.

Tobacco taxes are inherently regressive (because low-income people pay a higher percentage of their income in taxes), as smokers are disproportionately lower income. The bill burdens this group with a 100 percent tax increase without considering all of the consequences of that action.

Maine’s tobacco taxation structure should reflect a science-backed tobacco harm reduction policy. Harm reduction is a key public-health principle employed to mitigate health risks. Tobacco harm reduction equals a broad array of non-combustible tobacco products (vapor, SNUS, and moist tobacco). A body of evidence from leading health authorities indicates that vapor products are significantly less harmful than cigarettes, and decades of scientific research have established that oral tobacco products pose substantially fewer health risks to users than cigarettes. 

Logically, if tobacco products that are significantly less harmful than cigarettes are also significantly less expensive than cigarettes, today’s smokers will be more likely to use the safer products, either to help them quit or to transition to an acceptable substitute. 

Furthermore, a 100 percent increase in taxes on all tobacco products will undoubtedly drive both organized and casual smuggling of cigarettes into Maine. Maine’s neighbor, New Hampshire, already reaps tens of millions of dollars in tobacco tax revenues from cigarettes purchased there and carried to neighboring states. 

If LD 1423 becomes law, the disparity in the price of a pack of cigarettes in Maine versus New Hampshire will be more than $2 per pack.  With more than half of the population of Maine living within roughly an hour’s drive of the New Hampshire border, it must be anticipated that many of the State’s smokers will simply purchase their cigarettes elsewhere. 

Even more dangerous, organized criminals already reap the benefits of a substantial illicit cigarette trade bringing truckloads of cigarettes bought in other, cheaper states in the South to high-tax states like New York and Massachusetts. Both organized and causal smuggling will rob Maine of the tax revenue the bill hopes to gain, and one can be certain that those dealing in illegal tobacco products will not care about keeping these products out of the hands of youth.

The implications of raising tobacco taxes are complex. If the true goal is improved health and reduced disparities among socioeconomic groups, it must be handled with care and with an eye toward the foreseeable consequences. Simply demanding that some of Maine’s most vulnerable groups swallow a 100 percent tax increase is short-sighted and dangerous.  LD 1423 is the wrong bill for the health and safety of today’s smokers, and of all Mainers.

About Michael Madden

Dr. Madden is a family physician and former chief medical officer of a multi-state Medicaid health plan. He's also a consultant with RAI Services Company on issues related to tobacco harm reduction.

Recommended for you

Comments