Joint tax moves wrong course for state future

Published 6:00 am Tuesday, February 6, 2007

Taken separately no one – not even Gov. Haley Barbour – canargue against the merits of raising the tax on cigarettes andlowering the sales tax on groceries.

The state’s 18-cents-a-pack tax on cigarettes is ridiculouslylow and taxing groceries like everything else makes necessitiesmore costly for all of us.

The rub, however, comes in the legislative possibility oflinking the two tax moves in a so-called effort to be “revenueneutral.” In expressing his opposition to this linkage, Barbour iscorrect.

During a visit in Brookhaven Monday, the governor voicedconcerns about revenue uncertainty in the future when Katrinarecovery activities slow and people stop replacing appliances likewashers and dryers and other items lost during the storm. He calledfor a feasibility study on the ramifications of that slowdown onrevenue collections and questioned how that uncertainty would beaddressed.

Brookhaven may be offering a case study to illustrate thegovernor’s point.

While the Gulf Coast is still recovering and there are many morerefrigerators, freezers and other appliances to buy, communitieslike Brookhaven that are essentially back to normal are seeingrecent sales tax collections well below those enjoyed during themonths after Katrina.

Brookhaven’s sales tax collections for December 2006 were downalmost $50,000 from December 2005 and the fiscal year to date totalis down over $110,000 from the same point in 2005. The Gulf Coastcan also expect to see its robust sales activity subside at somepoint in the future, but when that will be is unknown.

Therefore, basing any budget moves on the continuation ofinflated buying trends is fiscally unwise.

Furthermore – and this is an older argument against a jointcigarette tax-grocery tax move – proponents of a higher cigarettetax say it could encourage people to stop smoking. If that’s thecase, then people are not buying cigarettes and thus are not payingthe higher tax that has been designed to offset the tax reductionon groceries.

Lawmakers are right to pursue a higher tax on cigarettes andshould enact it – even if over the governor’s veto. Lowering thesales tax on groceries is a right worthy goal, but one that shouldnot be done until there can be revenue certainty in all aspects ofthe move.

It’s said that two wrongs don’t make a right. Connecting ahigher cigarette tax to lowering the sales tax on groceries,however, would be case of two rights making a wrong.