Raising cigarette tax sensible option

Raising cigarette tax sensible option http://ift.tt/1u4AQgv
Raising cigarette tax sensible option

Alabama lawmakers casting about for ways to fill the deep hole in the General Fund budget should read the smoke signals and raise the state cigarette tax.

At 42.5 cents per pack, Alabama's tax rate is fourth lowest in the nation, higher only than those of Georgia, Louisiana and Virginia. Even if the rate were to be hiked by $1, Alabama smokers would still be paying taxes below the national average.

Such an increase could produce $230 million in new revenue, a windfall in a year when the Legislature faces a shortage of $260 million or more to pay the bill for critical services such as Medicaid, Corrections, courts and other non-educational needs.

Even a more moderate increase of 20 cents to 30 cents per pack could generate $65 million to $75 million in badly needed new revenue, a small step state Rep. Steve Clouse, R-Ozark, chairman of the House Ways and Means General Fund Committee, indicated he could support last year.

A higher cigarette tax would be particularly useful in covering increasing costs for Medicaid, the state-federal program that provides health care services for many of Alabama's poor, elderly and disabled.

Medicaid costs now eat up some 35 percent of the General Fund budget, or $685 million for 2015, and increase each year.

Gov. Robert Bentley hopes to slow the growth of those costs by switching Medicaid recipients from a fee-for-service system to private, managed-care programs.

But any savings from that experiment won't be realized for two years. And there's no guarantee they'll be significant, or that patient care will dramatically improve under privatized Medicaid.

Meanwhile, enrollment in the program passed the 1 million mark in 2014, as more working poor families not offered health insurance through employers signed up for coverage.

Numbers will continue to rise until the state's economy improves markedly with more higher-income jobs available, not merely service industry positions.

More Alabama residents will also qualify for Medicaid coverage as awareness about Affordable Care Act provisions spreads.

It's true the benefits of an increased cigarette tax are likely to dwindle over time, as the higher per-pack costs deter smoking. That would still be an overall win for public health and the state's budget ills.

The Campaign for Tobacco-Free Kids estimates the smoking-caused costs to health care and in lost productivity nationwide is a whopping $19.16 per pack.

The American Lung Association pegs Alabama's annual economic losses due to smoking at more than $3.6 billion.

Raising the cigarette tax isn't a panacea for Alabama's revenue quandaries. But until lawmakers get serious about reforming the state's archaic and inadequate tax system, it's a straw worth grasping. Source

from Usa Insurance News http://ift.tt/1DEDths

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