For the umpteenth time, various proposals by local governments to raise your local sales taxes died without so much as a hearing in the Idaho House. Good thing, too.
We hear a lot of whining from local government entities in Idaho about how they don’t get enough money from taxes now. So they want to tax you more by adding a penny or two to the six cents already there. Two cents doesn’t sound like much, but it would be a 33 percent increase; one penny doesn’t sound like much either, but it’s a 16 percent increase. Wanna pay more for virtually everything you buy? Didn’t think so.
These appeals are always couched in terms that “outsiders” aren’t paying their fair share. It’s said they come to work from out of town, shop, recreate, eat, drink, whatever, which means wear and tear on roads and other city services.
‘Tis true. But, you know, they also leave their money. They’re employed by local businesses, buy goods in town, from which “hub” cities like Twin Falls get higher sales tax receipts already. Yet, proponents say it isn’t enough. They want you to pay more for the privilege of driving across the I.B. Perrine Bridge or into town from Highway 95 or along Highway 30.
Everyone can see Southern Idaho’s growth all around us. Chobani, Clif Bar, Glanbia, on and on. Retail sprouting like spring plants along Cheney Drive. Medical offices going up almost overnight. Houses, houses, more houses. Developers say they can hardly keep pace for lack of workers.
Hundreds of millions of dollars of investments in the past ten years, and yet local governments don’t think rising valuations are bringing in enough to feed the insatiable maw of services. More, more, we must have more of your moolah.
I recall a former House Speaker from a generation ago, T.W. Stivers, who used to say there were three terrible times to raise taxes: one, when times were tough, when people were hurting; two, when times were just ok, when folks would like to save for a rainy day; and three, when times were good, when more money in people’s pockets helped the overall economy. Yep, times are now pretty good across Idaho, so here are several reasons not to raise sales taxes:
One. Local option taxes drive consumer purchases to other places with lower rates. The bigger the purchase, the more likely this will happen. This pushes localities to compete to “keep up,” thus raising taxes for all.
Two. Local option taxes place taxes on people who can’t vote for or against them. Proponents cite resort cities (Ketchum, McCall, etc.), but they don’t mention that when resort economies turn sour, these places can’t maintain their inflated services built on sales tax presumptions. Ketchum, for example, lost 30-40 percent of its revenue in the last recession.
Three. Local option taxes without representation are no different than what the American colonists faced from Great Britain’s stamp and tea tax, which led to tea bring tossed into Boston Harbor. Taxation without representation is one of the enumerated grievances specifically noted in Declaration of Independence. Why would we want to repeat that?
Four. Local option taxes create regional inequities, thus further distorting sales. Idaho auto dealers consistently oppose local option taxation because they know it would drive purchases out of state.
Five. The history of local taxes shows they never expire. Sure, proponents say there are sideboards, limits, etc., but ask yourself, have you ever seen a local tax reduction? Nope. Never. There will always be a new need or “must have” improvement. Won’t be any different if this is approved. Like Charlie Brown, you can count on Lucy pulling away the football just before the tax is set to run out.
Six. Local option taxes are likely to be used for so-called public facility expansions where the need isn’t clearly shown, where less expensive alternatives aren’t shown, for edifices like jails, justice centers, rec centers, events centers, etc. Most of these are then overbuilt and staffing is then increased to justify the prior expenditure. The result is more taxes on property and income as well as sales. These facilities sometimes compete with private businesses and eventually drive them out of the market, as public recreation centers do to private gyms and fitness centers. Supporters would prefer the surety of bond levies, but they’re harder to pass, so they turn to “sales” taxes which are “below the radar” and thus easier to hide.
These are just a few of the reasons local option taxation shouldn’t be expanded in Idaho. The Legislature is wise to again reject this proposal and, if anything, should consider rolling back the current ones in place for “resort” locations.
Oh, yes, there’s one more reason not to do this. It’s a tax increase, pure and simple. Who wants that?
Stephen Hartgen is a retired five-term Republican legislator from Twin Falls, where he served on the Revenue & Taxation Committee in the House of Representatives. Previously, he was editor and publisher of The Times News (1982-2005) and served on the Idaho Capitol Commission, which restored Idaho’s premier public building.