June 20, 2018
To: Members of the Delaware Senate
From: Americans for Tax Reform
Re: ATR Opposes Senate Bill 176
On behalf of Americans for Tax Reform (ATR) and our supporters across Delaware, I strongly urge you to reject Senate Bill 176, legislation that would impose a new tax – which some are inaccurately calling a fee – on prescription opioids.
Despite the good intentions behind it, if implemented, SB 176 would do nothing to help the opioid crisis. Rather, it would inflict a great deal of harm on the hardworking people of Delaware.
The additional costs associated with a targeted tax on opioids – both from the tax itself as well as increased costs for compliance – will be passed on to patients, families, businesses, and the state.
These costs cannot be avoided by legislative language saying that they should not be passed on to consumers. They will be paid by Delaware residents through higher insurance premiums, and state government will pay more through higher Medicaid costs, taxpayers are on the hook.
More than 20 percent of Delaware’s population participates in Medicaid, and around 25 percent of the state budget goes to healthcare costs, both higher than the national average. Shockingly, according to the latest data from DHSS, Delaware spent more on healthcare than all but four other states in recent years. The state should not be taxing itself and driving these costs higher.
Further, attempts to shield consumers from the cost of a new tax render any argument that higher prices will reduce consumption moot. This strategy has also been a demonstrable failure when it comes to cigarette policy. Consumers have turned to lower cost jurisdictions, smuggling, or simply absorbing the cost of higher taxes rather than changing behavior.
Beyond these negative consequences, opioid taxes could actually exacerbate the opioid crisis by turning addicts to more dangerous options, such as Fentanyl from China.
The opioid crisis is a complex tragedy that requires finding the right solution. SB 176 and other efforts to impose new taxes and fees on opioids would do nothing to solve the problem. As such, ATR opposes SB 176 and urges lawmakers to reject it.
If you have any questions or if ATR can be of assistance, please contact Doug Kellogg, State Projects Director, at (202) 785-0266 or [email protected].
President, Americans for Tax Reform