Similar Increases Could Help Reduce Health Care Costs by Funding Prevention, Says CSPI

Washington, D.C. - Governors, state legislators, and members of Congress interested in simultaneously bridging budget gaps and improving public health should look north to Maine. There, the legislature passed and Governor John Baldacci signed a package of tax increases on soda, beer and wine to help pay for a state health insurance program for small businesses and the self-employed. The nonprofit Center for Science in the Public Interest, which has long supported modest increases in taxes on soda and alcoholic beverages if the revenues are used to promote public health, applauded Maine policy makers.

"The fact of the matter is that if we raised taxes on soda by a penny or two a can, it could raise billions of dollars that could be used to promote public health," said CSPI executive director Michael F. Jacobson. "Larger increases on alcoholic beverages, which are long overdue at both the federal level and in most states, would have the added benefit of reducing underage drinking. Existing taxes on beer, wine, and liquor don't even begin to cover the health care, public safety, and law enforcement costs of problem drinking."

In Maine, excise taxes on beer will increase from 25 cents per gallon to 54 cents per gallon; wine excise taxes go from 30 cents to 65 cents per gallon; the syrup used to make soda will be taxed at $4 per gallon, and bottled soda will be taxed at 42 cents per gallon. The new revenues will be used to help fund a state health insurance program, Dirigo. ("Dirigo," Latin for "I lead," is also the Maine state motto.)

Other states might find it useful to use revenues from a tax increase on soda or other junk foods to help reduce health care costs by preventing obesity, diabetes, and heart disease (PDF, 60 KB), according to CSPI. Programs that foster physical activity, promote increased consumption of fruits and vegetables, and decrease smoking and alcohol abuse -- all worthwhile for their own sake -- could all put sizable dents in stressed state health budgets. Smoking, poor diet, physical inactivity, and alcohol abuse account for about 38 percent of all deaths. Yet only 2 or 3 percent of health care dollars are spent on prevention, according to CSPI.

"Here's an idea that Democrats and Republicans alike should get behind," said Jacobson. "Use small taxes on soda and booze to fund inexpensive interventions that improve diet, encourage physical activity, and otherwise prevent disease. Before too long we'd eventually spend billions less mopping up the mess with angioplasties, bypasses, statins, and other expensive surgeries and drugs."