BILL MINOR: Barbour ignores fairness on tax issue

JACKSON – Time is running out before next week's scheduled adjournment for lawmakers to override the governor's veto of a bill to hike the outrageously low cigarette tax and at the same time cut in half the outrageously high sales tax on groceries.

The measure is the first genuine legislative attempt in decades to redress two of the most glaring inequities in the state's tax system. So history is riding on the outcome.

A week ago the Senate failed by six votes to override the veto of a different hike/cut tax package. Not a good sign that the 2006 Legislature will make history.

Remember, it takes a two-thirds vote in each house of the Legislature to enact a bill over a veto by the governor. That's a pretty steep hill for lawmakers to climb unless a governor should be particularly unpopular or has no loyal cadre of legislative troops.

Neither is the case right now. However, Republican Gov. Haley Barbour, arguably the most partisan strategist to occupy the office, does have a problem in his own ranks.

Barbour has been getting good marks for handling Mississippi's response to Hurricane Katrina, despite the fact it is now evident he initially set his sights far too low on how much recovery money the state needed from Washington.

But because public opinion strongly favors both higher taxes on tobacco and lowering the high grocery tax, Barbour's veto of the tax bill has split his Republican ranks. Plus, his usually strongest GOP ally, Lt. Gov. Amy Tuck, is leading the push to pass the tax reform measure.

For years it has been evident to many that the most inequitable tax in the state's revenue system is the 7-cent sales tax rate on unprepared food (we're talking basics: milk bread, sugar, butter, flour etc.) At last it's on the table and a lot of credit goes to Amy Tuck for doing it.

Small numbers

Only a relatively small number of states collect sales taxes on groceries, or tax them at the full sales tax rate.

How egregious is it then for the state with the lowest per capita income and the most people living at or below the national poverty level to put the highest consumer tax on basic commodities?

The Senate bill still left in play would cut the 7-cent grocery tax in half. The previous vetoed bill that fell short of override would have eliminated the sales tax on food entirely by 2010.

It was wise to put the grocery tax cut in the same bill with a significant increase in the state's tax on cigarettes. Now at 18 cents a pack, ours is the second lowest in the country and was left untouched even while practically every other state has tacked as much as $1.50 a pack on cigs to curb consumption of tobacco as a key public health measure.

Forgetting the cuts

Barbour came into office in 2004 swearing allegiance to the Republican first commandment: thou shall not raise taxes. Since the state was then in a fiscal downturn, he didn't mention the Republican second commandment: thou shall cut taxes. (But you soon realize that the only tax Republicans want to cut is the INCOME tax.)

So Barbour in vetoing both cig/grocery tax bills sent to him above all honored the first Republican commandment. (Notably, last week the American Cancer Society ran full page ads in Mississippi newspapers criticizing Barbour for his veto and reminding Mississippians that not long ago he was the top lobbyist for Big Tobacco.)

You'd think then that Barbour would jump at the chance to cut the most oppressive tax the state levies, namely the sales tax on groceries. But no, commandment No. 1 controls.

This column has said for years the state's tax system is way out of whack: that the sales tax is too high and the income tax, with individuals and corporations taxed at the same rate, is too low.

That's obvious when Mississippi's tax system is plotted on a graph with other states and it shows we depend more heavily on sales taxes than on income taxes for our total general fund income, the opposite of many other states.

Recently, I had an interesting conversation with former Gov. William Winter who said he'd gotten a phone call from Barbour, asking him to rally school forces to support his veto, contending that the grocery tax cut could make it harder to fund public education.

Terse conversation

Winter told Barbour the state needs more revenue, and the best way to get it would be by adding another top bracket to the income tax. Silence followed (“I thought he'd hung up on me,” Winter told me) and then Barbour excused himself and got off the line.

The argument used by Barbour and some of his hard-core GOP anti-taxers such as state Sen. Charlie Ross of Brandon for opposing the grocery sales tax cut, that it would cost municipalities some of their state sales tax diversion, just won't wash. (Cities get 18 1/2 percent share of sales taxes.)

The first cig-grocery tax bill sent to Barbour may have meant a slight dip in municipalities' sales tax share after two years, but that was completely fixed in the second bill which he also vetoed. By the way, nobody in the Legislature seems to mention that some two dozen cities and towns have been authorized to levy a local sales tax for everything from coliseums to a youth baseball complex.

Bill Minor is a syndicated columnist who has covered Mississippi politics since 1947. His address is Box 1243, Jackson, MS 39215.