It’s really sad when lawmakers bemoan the cost of public health with slurs like “a runaway train.” Here’s the real train wreck in tax policy – subsidizing excessive drinking.
Whether or not a person drinks, every New Mexican pays $406 a year in taxes to cover the costs of ambulances, indigent and emergency room care, extra police work, court cases and detention for excessive drinkers and the people they injure through car crashes and assaults.
Increasing the alcohol excise tax by 25 cents per drink lets excessive drinking pay for excessive drinking harms.
Our state would see an annual revenue boost of $154 million by raising alcohol excise taxes 25 cents per drink. Imagine if we used the bulk of that money to pay for the required 5 percent match for the newly insured by Medicaid?
Over the past two years, the federal government paid for expanding Medicaid to over 200,000 previously uninsured New Mexicans. Starting in 2017, we’re required to pay a 5 percent match to keep this health care bonanza serving our state.
Instead of crying that it’s going to cost an additional $85.2 million next year to cover the Medicaid expansion, lawmakers should be rejoicing that the federal government will give a 95 percent match, pumping over $1.6 billion back into New Mexico’s stagnant economy, if we show the political will to make the initial $85 million payment.
The gross receipts taxes alone on that massive cash infusion will more than pay for the match and keep health insurance for over 200,000 New Mexicans.
Alcohol excise taxes haven’t been raised since 1993. That’s over 20 years in a row alcohol companies have been given what amounts to a tax break due to inflation.
According to the CDC, only 18 percent of New Mexicans drink excessively, yet excessive drinking costs the state economy $1.8 billion a year due to lost work days, workplace accidents and increased insurance costs.
Raising the alcohol excise tax 25 cents per drink in New Mexico would boost the state economy by $128 million a year by eliminating about 10 percent of these costs. On top of this, it would create 2,700 new jobs because of the increased tax revenues. That 2,700 figure is the net gain in jobs over and above accounting for jobs lost in the liquor industry.
So what’s it going to be?
Continue to subsidize excessive drinking and the harms it causes, or let excessive drinking pay for the harms it creates by raising the alcohol excise tax 25 cents a drink?
Force cash-strapped New Mexicans to each pay over $400 a year in unnecessary taxes and business owners to lose $1.8 billion in revenues or shift the cost to those who create it by having excessive drinkers pay for the costs of excessive drinking?
See the state’s economy lose another $1.6 billion a year in federal health care funding and force counties to use local taxes to pick up that slack and pay for indigent care for the over 200,000 newly insured Medicaid enrollees, or use some of the revenues generated from an alcohol tax increase to pay a 5 percent match to keep people healthy?
There’s plenty of money in our economy. The only question for lawmakers is whether they’re going to choose to spend it on public health and the economic growth that creates, or plead poverty while continuing to subsidize public harms.