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Fight Over Excise Tax Just Heating Up

posted in: Weekly Commentary 0
By Lowell L. Kalapa


Well, the spin doctors are hard at work down at the legislature and in the media as the second half of the legislature goes into high gear.
The question taxpayers should be asking is: Are taxpayers being set up for a tax increase? On the Senate side, the position is “no general excise tax rate increase,” but in order to accomplish that position, Senators are throwing out suggestions to cut public employee pay across the board and eliminate a few state holidays and possibly reduce the amount of sick leave and vacation time due public employees.
 

 

 
Are taxpayers being set up for a tax increase?
       On the House side, the position is to raise the excise tax rate by 0.5 to 4.5%. Taxpayers should be “so lucky” that it wasn’t 4.75% or 5.35%. And perhaps that is the ploy, suggest an outrageous rate increase and fall back to a more “modest” rate increase that doesn’t look quite as bad. Those taxpayers who are on the ball have already labeled this idea for what it is, a tax increase.

True, true, both sides are adopting substantial cuts in the net income tax in the face of shrinking revenues. However, what is more important is how each side is going to pay for those cuts and what the potential obstacles will be in achieving these goals. As noted earlier, the Senate wants to pay for its tax reductions with cuts in public employee pay and benefits. The House wants to pay for its tax cuts with a tax increase.

 

 

   

Will the legislative session come down to the closing hours when it is all too late to do anything else except to buy into an increase in the general excise tax rate?

       Now the logical thinking would have us believe that public opinion would weigh in against raising the general excise tax. And certainly there seems to be substantial public sentiment against raising the general excise tax rate.

However, there are already threats that the public employee unions will fight any effort to cut public employees pay or reduce the number of benefits such as vacation days. Even the attorney general has indicated that she doesn’t believe it will be constitutional to do so. Thus, it seems that the opposition is lining up to oppose pay cuts and reductions in public employee benefits leaving lawmakers with the basic alternatives of either paring back the tax cuts, cutting even more spending, or raising tax rates.

If lawmakers are hard pressed to cut anymore spending because various constituencies bring pressure to bear or if it means laying off public employees and they want to show that they did cut taxes, will they turn around and raise that general excise tax? Will the legislative session come down to the closing hours when it is all too late to do anything else except to buy into an increase in the general excise tax rate? It is a very plausible outcome given how tight money is and how unwilling the public employee unions have been to find some sort of compromise to the state’s fiscal crisis.

 

 

   

If you don’t let your elected official know how you feel about tax increases, then you will have given up before the battle even got underway.

       For those who are unfamiliar with the legislative process, it doesn’t seem possible that enough pressure could be exerted to cause lawmakers to switch their opinions. In fact, it is not uncommon to hear from the average voter that his or her call or complaint will not be heeded. But believe it or not, lawmakers are sensitive to how their constituents feel. And why not, it is the people in their district who will make or break them in the next election. They also know that unions provide manpower in elections and big businesses supply the money to run those elections.

No doubt the public employee unions will be out in full force trying to protect their members. The question is who will be out there looking out for the taxpayers of this state? As taxpayers, we all have a responsibility to let our elected officials know how we feel.

If you feel your voice doesn’t count, then consider what one lawmaker said, “Well, nobody ever called me on that issue, so I thought I was doing the right thing.” If you don’t let your elected official know how you feel about tax increases, then you will have given up before the battle even got underway. So call your lawmaker and let him or her know how you feel about the general excise tax rate increase.

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