Maryland: Maryland Plan Would Increase Alcohol Tax to Reduce Health Disparities

Mark Willingham Uncategorized

Maryland: Maryland Plan Would Increase Alcohol Tax to Reduce Health Disparities

Source: https://www.taxnotes.com/

SEP. 15, 2020

Maryland lawmakers plan to introduce legislation that would increase the state sales tax on alcohol by 1 percentage point to fund a program designed to reduce health disparities, which have become more apparent during the COVID-19 pandemic.

The proposal will be sponsored by Sen. Antonio Hayes (D), Del. Erek L. Barron (D), and Del. Jazz Lewis (D), according to a September 10 media advisory. It is backed by a coalition of more than 100 organizations in Maryland, including the Maryland Citizens’ Health Initiative, which is spearheading the campaign.

The legislators did not respond to requests for comment by press time.

Under the legislation, areas with “poor health outcomes” across the state would become eligible for grants, tax incentives, and healthcare provider loan repayment assistance to increase access to high-quality care.

The program would be modeled after the Health Enterprise Zones Initiative, a program established by S.B. 234, signed into law in 2012 by then-Gov. Martin O’Malley, that was designed to reduce health disparities among racial groups and geographic areas, improve access to healthcare, and lower healthcare costs. It was allowed to expire in 2016 under Gov. Larry Hogan (R).

Under that pilot program, Maryland designated five areas of the state as health enterprise zones. The state provided financial incentives, such as income and hiring tax credits and loan repayment assistance, to attract primary care practitioners.

A September 10 white paper from the Johns Hopkins Center for Health Disparities Solutions notes that a 2018 analysis found the initiative reduced inpatient hospital stays and reduced healthcare costs by more than $93 million.

The Maryland Citizens’ Health Initiative led a successful effort in 2011 to increase the tax on alcohol to help fund the Health Enterprise Zones Initiative, according to its website. A tax of 3 percent was applied to sales of alcohol, in addition to the state’s 6 percent sales tax, to bring it on par with the tax rate levied in the District of Columbia. The District’s alcohol tax is now 10 percent for on-premises consumption and 10.25 percent for off-premises consumption, according to DC.gov.

The new proposal would establish “Health Equity Resource Communities” that would be funded by increasing Maryland’s alcohol beverage sales tax from 9 percent to 10 percent in 2021. Supporters say the tax increase would “significantly decrease drunk driving, underage drinking, and other problems caused by excessive alcohol use.”

Under the proposal, the tax increase would be delayed by two years on alcohol sales in restaurants and bars to provide relief to businesses that have been negatively affected by the pandemic, Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, told Tax Notes September 14.

It is expected to generate approximately $14 million in fiscal 2021 and about $22 million in fiscal 2023, DeMarco said.

In the release, Hayes said the “pandemic has made it even more clear that certain communities, especially communities of color, do not have the healthcare resources they need, which leads to disturbing health disparities.”

“This Health Equity Resource Communities initiative will direct significant new funding to these areas, a critically needed step for Maryland to build healthier communities for everybody,” Hayes said.

According to the Centers for Disease Control and Prevention, “longstanding systemic health and social inequities have put many people from racial and ethnic minority groups at increased risk of getting sick and dying from COVID-19.”

People of color are more likely to contract COVID-19 than white people in the United States. Black people and Latinx people are 2.6 and 2.8 times more likely to contract COVID-19, and 2.1 and 1.1 times more likely to die from the disease, respectively, the CDC says.