Alcohol tax increase: Haven't we been here before?

Claims for alcohol tax increase eerily reminiscent of cigarette tax push

August 12, 2010|By Marc Kilmer

The Health Care for All Coalition is once again leading the charge to raise Marylanders' taxes to expand the state's government health care program, Medicaid. I'm reminded of what the White Queen said in "Through the Looking Glass": "It's a poor sort of memory that only works backwards." I guess my memory must be pretty poor, because I can't help but remember that we've heard this idea before.

In 2007, Health Care for All pushed through a cigarette tax increase that was supposed to fund an expansion of Medicaid. Under that legislation, more children and parents would be eligible for the program immediately and then, in later years, some childless adults would qualify. But in the years that followed, the expansion to childless adults was put on hold when it turned out there wasn't enough revenue to pay for it.

Under the Health Care for All Coalition's previous plan, the cigarette tax doubled — and yet there still wasn't enough money to pay for expanded government health care, contrary to the coalition's prediction. In fact, Medicaid spending is so out of control that the governor had to assume there would be an extra $389 million in federal funding for the program in this year's budget. Congress decided that it would not fully fund the state's Medicaid bailout, though, meaning Maryland can't even pay for the Medicaid program as it currently exists, let alone one that will cover even more people.

Instead of learning from the fiscal train wreck they helped create, the coalition blithely ignores the past and recycles the same talking points to push for an alcohol tax increase. It presents rosy numbers for how much the alcohol tax will bring in, forgetting that the cigarette tax hike produced 43 percent less revenue than the coalition claimed it would.

Sure, the cigarette tax didn't produce enough revenue to pay for 2007's Medicaid expansion, nor is there any evidence it lowered the state's health care cost. Yet that doesn't stop this group from making overly optimistic claims about the revenue from an alcohol tax increase.

If the Health Care for All Coalition had been correct in 2007, it wouldn't need to push for a new tax hike to fund Medicaid's expansion to childless adults. As the Health Care for All Coalition website claimed at the time, the cigarette tax increase would mean the state would "have enough money in reserve to fund these programs." The only reason the coalition is pushing for a new tax is because its 2007 plan was a failure.

Maybe it is a poor sort of memory that works backwards. Working forward instead, I predict that if this alcohol tax increase passes, it will not produce the revenue that the Health Care for All Coalition is claiming. I also predict that if Medicaid is expanded, it will cost more than anticipated and contribute to future state budget problems. Furthermore, when these things happen, the Health Care for all Coalition and its allies will be out there pushing for higher taxes and more government spending, ignoring any memory of the failures of their past proposals.

Marc Kilmer is a senior fellow at the Maryland Public Policy Institute. His e-mail is mkilmer@mdpolicy.org.

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