Thinking people will reject the notion that a tax increase is required to balance a formula the state created 15 years ago and keep car tag costs in check.
It’s a scam lawmakers started as they edged toward taking a few weeks off to await more details on how much money they’ll control when someone gets around to reading the federal stimulus bill Congress passed (without reading) in February.
It’s a scam that will be renewed when lawmakers return to Jackson to complete the budget and, perhaps, push for a House-Senate compromise on how much to raise excise taxes on cigarettes and other tobacco products.
Here’s the deal:
- In 1994, protest by car dealers on the ridiculously high taxes being paid by Mississippians buying or renewing licenses plates reached a crescendo. As car prices had risen marginally, the calculation of tag taxes based on the higher prices had risen exponentially.
- Families with trade-ins were having no problem qualifying for car loans with affordable payments. It was coming up with $800 to $1,500 in cash to pay for a tag for a new car that kept them out of showrooms.
- Most car tag money goes to cities and counties to do such things as build and repair streets and roads, pay and equip deputies and police and firefighters and to provide the local portion of public school budgets.
- The state’s general sales tax on vehicles was 3 percent. Sales tax money goes to the state treasury. None of it is rebated to counties and 17 percent is rebated to cities.
- The swap was to raise the sales tax to 5 percent. The state would then send the additional 2 percent back to cities and counties to be used as a “credit” on the purchase of car tags, lowering the cost, in many cases, by as much as half.
Be clear: This was not a tax cut. owners of the 1.2 million registered vehicles in Mississippi were still paying as much as they would have paid without the change. The difference was that the higher sales tax could be financed and paid as part of the car note.
This year’s argument is that due to the national recession and sluggish sales of new vehicles, the state’s stash of cash it would normally collect on car sales and rebate to local governments is falling short – about $30 million or so short.
So, the consensus in the Legislature seems to be that a tax – most likely the cigarette tax – will have to be raised to keep things even.
The fallacy, obviously, is that things will not be even. And unless a person is silly enough to believe that once the economy gins back up and car sales rise that the Legislature will cut whatever tax is increased, the result will be another net gain for public treasuries.
The most offensive aspect is this “keep things even” phrase. It only arises when when government revenue shrinks.
Never – ever – is there any consideration to “keep things even” when there’s a surge in what people are paying.
Consider that in 1995, the year the first “legislative tag credit” was printed on a car-tag invoice, the state’s General Fund budget was less than half what it is now.
Casino development had just begun when the tax swap won out over a plain old tax cut for car tags 15 years ago. Since then, casinos alone have paid $4.5 billion in revenue taxes – not including all the property and other taxes casinos and their hotels pay – and the state has found a home for every shiny new penny. No one has stood in the well of the House or Senate to say anything about any need to “keep things even” by sharing that windfall with Mississippians.
For years, tobacco taxes have been horribly low in Mississippi, almost amounting to subsidizing smoking in a state with more than its share of cancer patients and more than its share of poor people. Raise the levy on tobacco, but find a less-laughable rationale.
With a General Fund approaching $6 billion, it’s inexcusable for any lawmaker to say $30 million must be collected in new taxes to “keep things even.”
Taxpayers are being mugged.
Charlie Mitchell is executive editor of The Vicksburg Post. Write to him at Box 821668, Vicksburg, MS 39182, or e-mail firstname.lastname@example.org.