
Health Advocates Laud Tobacco-Tax Hike As Cigarette Sales in State Continue to Drop
Thursday, September 17, 2009
By JOHN WAGNER
A leading health-care advocacy group in Maryland is touting numbers showing a sustained drop-off in cigarette sales since the state doubled its tobacco tax in January 2008
In Maryland, 201.8 million packs of cigarettes were sold that year, down from 275.7 million in 2007 and 273.4 million in 2006, according to data gathered from the state comptroller's office.
Vincent DeMarco, president of the Maryland Citizens' Health Initiative, attributed the decline almost entirely to the legislature's decision during a 2007 special session to raise the tobacco tax from $1 to $2 per pack.
From a revenue perspective, the higher tax more than offset the drop-off in sales. In the year after the increase took effect, tobacco tax collections on cigarettes increased from $273.8 million to $418.0 million.
That's less than state fiscal analysts had anticipated, but the money helped fund an expansion of subsidized health care to more than 47,000 newly insured Maryland adults.
"This was a big success," DeMarco said. This shows that the dollar tax increase did exactly what public health advocates predicted."
In July 2008, The Washington Post reported that cigarette sales dropped by nearly 25 percent during the first six months that the tax increase was in effect. At the time, there was a good deal of speculation that smokers were picking up extra packs in lower-tax jurisdictions, including Virginia, Delaware, Pennsylvania and the District.
Data on that theory are inconclusive. DeMarco said that purchases across state lines probably have not been widespread, given that cigarette sales dropped in Delaware and the District during that period and that the District raised its tax to $2 in October. Modest upticks in sales have occurred in Virginia, where the cigarette tax is 30 cents per pack, and Pennsylvania, but nothing approaching the magnitude of Maryland's decrease.
Data shared by DeMarco's group run through last year. In the early months of this year, sales in Maryland were back up slightly, according to numbers kept by the comptroller. That was probably in anticipation of a federal tobacco tax increase of 61 cents that took effect April 1, analysts say. Since then, Maryland sales have started dropping off again.
DeMarco's group is pushing the General Assembly to raise Maryland's tax again, by 75 cents, to further expand health care in the state. With election season around the corner, that seems like a long shot for the coming session.