Campaign 2008 Question 1: People’s Veto Taxes versus health care

Do you want to reject the parts of the new law that change the method of funding Maine’s Dirigo Health Program through charging health insurance companies a fixed fee on paid claims and adding taxes to malt liquor, wine and soft drinks?

As Maine goes, so goes the nation? The state’s former reputation as a national bellwether is no doubt on the minds of those who both support and oppose Question 1 on the November ballot.

If the referendum passes on Nov. 4, it would overturn a recently-enacted law that levies a tax on soda, beer and wine to help pay for and expand Maine’s DirigoChoice health insurance programs.

Opponents of the referendum say Mainers will pay just a penny more for a glass of wine and four cents for a can of soda. Supporters say the ultimate costs will be much higher, and Mainers shouldn’t have their beverages taxed to pay for the health programs.

“Through this veto, we’re giving Maine people the opportunity to have their say on these new taxes,” said Leslie Thistle, owner of Bangor Cheese & Wine and Cafe Nouveau and a Question 1 proponent.

But many who support Question 1 aren’t as local as the Bangor businesswoman. National beverage companies including the Pepsi and Coca-Cola bottling companies and Anheuser-Busch donated $1.5 million between July and September of this year to help overturn the new tax.

All the national attention is because Maine’s law has significance beyond its borders, according to the director of the Washington, D.C., think tank the Center for Science in the Public Interest.

“There are about a dozen states that have soda taxes,” said Michael Jacobson, director of the center. “But I don’t know of any other state that’s using revenues to promote health.”

Jacobson said he thinks the soda companies have targeted Maine because of the law’s significance.

“Maybe for them, Maine is good practice,” he said. “The next time a state or Congress tries levying a tax on soda, they’ll be ready with their arguments.”

The law that Question 1 seeks to overturn involves more than taxing soda and other beverages of choice, although that is where much of the attention has gone.

Before the new law was passed in April, the state’s roughly $50 million DirigoChoice programs were funded by the unpredictable and unpopular Savings Offset Program. The program has taxed health insurers since 2003 on the state’s estimated cost savings thanks to the Dirigo programs.

It has been replaced by a 1.8 percent surcharge on health insurance claims, which should generate $33 million in 2009, and the new excise tax on beer, wine, soda and other sugary beverages that the state estimates will raise about $17 million.

Officials from the Maine Medical Association who are fighting Question 1 recently said that if they could frame the referendum as a health care matter, they would win, but if it is framed as a tax matter, they will lose.

“From a physician’s standpoint, it’s a win-win tax,” said Gordon Smith, vice president of the Maine Medical Association. “These products, along with tobacco, should be taxed. They contribute to obesity, diabetes and high health care costs.”

But that’s not what those working to overturn the tax think.

Fed Up With Taxes, the political action committee that gathered enough signatures to get Question 1 on the ballot, has funded an economic study that shows the tax would have a sharply different impact than previously expected.

University of Maine economist Todd Gabe estimated that every Mainer drinks 52 gallons of soda, sports drinks and other taxable beverages each year – a higher figure than the one used by the state. Using those figures, Mainers would pay about $40 million in additional taxes.

According to Gabe’s figures, the higher figure would lead to a statewide reduction in sales revenue of $26 million per year and the loss of 395 part-time jobs.

“I think that far more people will be harmed than will be helped under the proposal,” said Kristine Ossenfort at the Maine State Chamber of Commerce.

Thistle said her Bangor businesses are already threatened by the imploding economy.

“People will buy less,” Thistle said. “I’m in the business of want, not need. It has an impact.”

Thistle also was one of the first proponents of Question 1 and said that tax hikes, however slight, have real impacts on real Mainers.

“Enough is enough,” Thistle said. “We don’t need anymore taxes right now. What we need is help.”

Opponents of Question 1 agree with Thistle that the tax would have a real impact on Mainers.

Dr. Stephanie Lash of Bangor, the president of the Maine Medical Association, said funding health care is important even in tough economic times.

“One of the best investments we can make to keep the state strong and vibrant is, literally, to keep the state healthy,” she said.