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TAX NEWS - may 2010

U.S. Tax: Some states introducing health-related taxes

By Michelle Rupe Eubanks, 30 May 2022 -- Jackie Posey, of Town Creek, would gladly pay a few cents more for her candy bar or bottle of soda, if the extra money generated would go toward health programs geared toward children.

"I'm not a high-income person, but I don't have a problem paying what I can afford to pay on taxes so our services are adequately maintained," she said. "It'd probably cost us less in the long run. People need to be rewarded for doing what's right and penalized for doing what's not good for them."

Health taxes, like the ones some states are proposing on sugary sodas or candy as a means to change people's behavior, aren't a new idea.

Taxes of this nature have been in place for years on non-necessities, such as tobacco and alcohol, as a means to curb the use of these items. Data suggest these taxes work. In New York, for instance, where the tax on a single pack of cigarettes is about $6, smoking by underage people and those in lower-income groups is among the lowest in the country.

In these tough economic times, states such as Illinois are looking at raising tobacco taxes in order to generate revenue. Other states are looking at new tax ideas. California is implementing an environmental tax on plastic bags, while lawmakers in Colorado have approved a tax on tanning beds.

Officials in Alabama are divided on how, or if, any new health taxes should be implemented.

Bill Stewart, a professor emeritus of history from the University of Alabama, said the fact that we don't tax some of these items indicates just how behind the state is on taking an active approach to its residents' health and welfare.

"We're behind in a lot of things, and this is another area we need to act on," he said. "We're a low tax state, and that means fewer services to people. At some point, we have to consider these things. We're so far behind in environmental sensitivity and our concern to promote a higher level of health by reducing obesity and other health problems caused by overconsumption of unhealthy and junk food."

Stewart said taxes are the driving force behind many elections, and those who raise taxes in their tenure don't get elected for extra terms, he said.

State Rep. Marcel Black, D-Tuscumbia, explained it this way: "Alabama and most of the Legislature are tax averse."

A soda tax was mentioned a couple of years ago, but it failed to gain any traction for two reasons, Black said.

"Number one was the influx of their lobbyists, and number two is the absolute tax averse nature of the state and the Legislature," he said.

Black said taxes in Alabama are generally designed to raise revenue for a basic service, rather than pinpointed toward a particular social ill.

"Whether that's right or wrong could be debated all day," he said. "There has been little talk of revenue-raising measures of any kind. We've got to look at the economy. If it's a tax that going to hurt the recovery, then maybe it's not the right time for it. When times are good, you don't think about taxes. It's a catch-22."

State Health Officer Dr. Don Williamson said the time may never be right, but there is overwhelming data to support the idea that the higher the tax on an item the more it deters an individual's behavior.

"Alabama ranks in the bottom 10 states of the lowest tobacco taxes in the nation, and there's a clear relation between an increased tobacco tax and decreased consumption," he said.

"The effects of that are felt most dramatically on younger consumers because they have less disposable income."

In Alabama, the tobacco tax per pack of cigarettes is 67 cents. Williamson said increasing that amount to $1, which is still less than the national average, could have a measurable impact on tobacco consumption in the state, especially for teens and younger smokers.

"It would raise revenue and discourage consumption," he said.

If it works for tobacco, could it also work to deter some of Alabama's most unhealthy behavior?

Williamson said he's not sure as there's been no data collected on the issue, but the success of the tobacco tax does indicate it's possible.

"The concept is logical, and it makes a great deal of sense," he said.

"Tobacco is an absolutely indispensable item. We don't have to smoke, but we do have to eat. The problem is the healthiest foods often aren't the least expensive foods; the least expensive foods are the ones that are often least healthy."

Compounding the problem is that "we're probably 25 years behind in obesity work than where we are in our tobacco work," Williamson said.

"Obesity in the U.S. didn't start exploding until the 1990s, but it was almost 50 years ago when the Surgeon General linked smoking with lung cancer. We're just not where we need to be in recognizing obesity as a problem."

Getting around that won't be easy, Williamson said, which is why he believes it's important that legislation, such as a grocery tax, continue to be introduced until it passes.

"We've been asked to provide a list of items that would be considered unhealthy and would then be taxed for falling into the low-nutrition category," he said.

"It's one way to start. If we take the tax off high-nutrition foods and leave it on low-nutrition foods, which can be a 7 to 10 percent savings, it could make those carrots look pretty good."

It's unclear how the public would support these kinds of taxes.

Kimball Forrester, executive director of Alabama ARISE, a citizen's policy project based in Montgomery, said his organization is still in the exploring stage on some of these taxes and whether they are something to be supported and encouraged.

"We frequently find ourselves in a bind when it comes to regressive taxes that would be good for people's health, as we're an organization that's primarily concerned with poverty issues," he said.

"It's a quandary."

Like Williamson, Forrester points to the cigarette tax.

"It's a tax that takes a bigger bite out of lower-middle income people's budgets, but, if it helps people not smoke at all, it would be a good thing," he said.

In Alabama, there's a belief in what's known as sin taxes, Forrester said.

"The question would be is if this is a sin people are willing to be punished for," he said.

"Are they going to say, 'Wait a minute. You've quit preaching and gone to meddling when you've started to tax my sugar.' "
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