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Sock It to the Taxpayer Again, Raise that 4% Tax

posted in: Weekly Commentary 0
By Lowell L. Kalapa

     It seems lawmakers wanted to beat the religious calendar by a whole week this year by resurrecting the proposal to raise the general excise tax rate to 5.35%.

Incredulous as it seems, there are indeed some lawmakers who truly believe that the state should raise the money needed to keep public programs running and to start up new services. These lawmakers apparently don’t believe taxes are too high, that perpetuating the way government has done business for the last forty years is worthy of higher taxes, and that lawmakers should not be questioning how services are delivered by public employees.

Somewhat shocking isn’t it – given the fact that while more than one-third of the state general fund budget is being spent on lower education that lawmakers would justify the proposed tax increase on the basis that the new moneys are needed to improve education programs. Where are these legislators when they are asked to account for their actions? Where are these legislators when the questions need be asked about how these education dollars are being spent?

For these legislators the consistent response to the problems that face government is to throw more money at the problem in the hopes that if enough money is spent, the problem will go away. Perhaps because it is not “their” money, these lawmakers are eager to spend away the problems of the state. More likely, it is because for the vast majority of lawmakers there has been no “life experience” of struggling to make ends meet or to make sure there is enough money in the bank to make payroll next week.

Indeed many lawmakers have come right out of school and into the legislature, served as legislative aides, or worked for some agency within government. There are few lawmakers who have run a business or have been an employee of a private business. As a result, when they serve as the policy makers of the largest business in the state – state government – they truly believe the well is bottomless.

As a result, few lawmakers understand how cruel the general excise tax can be. This lack of understanding is evidenced in their advocacy of cuts in the corporate net income tax as opposed to the tax on gross income. They also see the tax system as a mechanism by which they can accomplish many of their social goals.

Instead of trying to live within their means, within the amount of taxes that the current system produces, they resort to raising taxes as they did last week or in the alternative to raising user fees as they are now considering under the bureau of conveyances and as they did with the business registration fees a few years ago.

What lawmakers seemingly attempt to avoid is having to say “No” to constituents. As a result, every request gets funded. It is that practice that has gotten the state into trouble as program after program and position after position was added to the public payrolls. Now that the economy has slowed and tax collections barely surpass the prior year, there isn’t enough money to cover all those obligations. Thus, the reason for the tax increase proposal.

The choices are very clear and distinct for lawmakers as well as for readers, either elected officials cut spending and the size of government or taxes will have to be raised. There are no if’s, and’s or but’s about it. Maintaining the current level of services will require “revenue enhancements” of some sort. Be it tax increases, or fee increases, the fact of the matter is that there is no money.

And true, tax cuts will mean less money for state government. And yes, lawmakers don’t have to adopt any of the tax reduction proposals, but you know what, if they don’t, the economy will continue to slide even deeper into this recession.

So will they raise the general excise tax? Anything is possible between now and the end of session. Remember, they must balance the budget before they adjourn. If they don’t have the money and can’t find the political will to cut spending, then a tax increase just might be the alternative they choose.

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