Flopping Around with Scissors
It looks like the Senate is stirring to undo the $70 million cut to the food tax. Sen. Eastman wrote:
Measure Twice, Cut Once
Problems with the new bifurcated system for tax on food are multiplying.
A few examples:
The negative impact on retailers, especially mom and pop shops in rural Utah;
The escalating cost of compensation for retailers forced to retool their systems;
Lack of comprehensible definition of what is and is not “food”;
Unclear policy on the bundling of “food” with non food items;
Shaken confidence in the numbers to the point we don’t know the price tag is really $70 million;
A higher price tag would damage transportation, health and human services, and other General Fund priorities;
We don’t know the extent of all the negative impacts. Unforeseen problems continue to come out of the woodwork.
This is poor policy and we should have known better. After some careful discussion in caucus today, the Senate Majority voted in support of a six-month delay (giving the new bifurcated food tax policy a start date of July 1st).
This will give us time to clarify the fiscal note and to start fixing the unintended impacts and consequences.
Why hurt people when we don’t have to? Why rush into a poorly-thought-out policy decision when we are not ready to mitigate the damage?
I responded with the following on the Senate Site:
This seems a bit late and overblown. But, maybe some more details would help.
Your first two points appear to restate the same issue -- retailers would be impacted. Were Rep. Ferry's bill to pass, what would those remaining impacts be? And, if tax relief is not delayed as you're advocating, should we even bother with Rep. Ferry's bill since the Senate seems to argue that it doesn't get the job done?
Your next two points also appear to restate the same issue -- difficulties in distinguishing food/non-food items. What exactly are those difficulties that you think can't be worked out by January 1?
Your next two points again appear to restate the same issue -- that the fiscal impact could be higher than was anticipated. How much higher?
Your last point is simply the truism that we don't know what we don't know.
So, it looks like 3 issues might be "coming out of the woodwork." Before we deny taxpayers 70 million dollars in tax relief each and every year (or $35 million, if we delay it 6 months), it might make better sense to analyze the nature and scope of those issues. We have plenty of time to do that.
The issues weren't significant enough to even warrant discussion of a delay in all-day leadership meetings on Tuesday. To sound the alarm bells the next day for immediate action (which would have the effect of lifting another $35 million from taxpayers) -- when the provisions won't go into effect for another 7 months -- seems less like measuring twice and cutting once than it does flopping around with scissors.
In any event, it's nice that you have the blog so that we can discuss these issues.
I would be very interested in having the Senate address the 3 issues in more detail: (1) does Rep. Ferry's bill correct the retailers' problems and, if not, should we scrap that bill; (2) what are the insurmountable difficulties in distinguishing food/non-food items; and (3) how much higher do you think the fiscal impacts could be and what is your source?
They are serious questions, and I'd like to have the Senate's perspective on those issues. Of course, if they won't discuss these things with the House (in person, on-line, or otherwise), then they won't. That's simply a stopper. Without discussion, most House members likely are left to believe that some Senators are just bristling over passage of a bill that they don't like.
Measure Twice, Cut Once
Problems with the new bifurcated system for tax on food are multiplying.
A few examples:
The negative impact on retailers, especially mom and pop shops in rural Utah;
The escalating cost of compensation for retailers forced to retool their systems;
Lack of comprehensible definition of what is and is not “food”;
Unclear policy on the bundling of “food” with non food items;
Shaken confidence in the numbers to the point we don’t know the price tag is really $70 million;
A higher price tag would damage transportation, health and human services, and other General Fund priorities;
We don’t know the extent of all the negative impacts. Unforeseen problems continue to come out of the woodwork.
This is poor policy and we should have known better. After some careful discussion in caucus today, the Senate Majority voted in support of a six-month delay (giving the new bifurcated food tax policy a start date of July 1st).
This will give us time to clarify the fiscal note and to start fixing the unintended impacts and consequences.
Why hurt people when we don’t have to? Why rush into a poorly-thought-out policy decision when we are not ready to mitigate the damage?
I responded with the following on the Senate Site:
This seems a bit late and overblown. But, maybe some more details would help.
Your first two points appear to restate the same issue -- retailers would be impacted. Were Rep. Ferry's bill to pass, what would those remaining impacts be? And, if tax relief is not delayed as you're advocating, should we even bother with Rep. Ferry's bill since the Senate seems to argue that it doesn't get the job done?
Your next two points also appear to restate the same issue -- difficulties in distinguishing food/non-food items. What exactly are those difficulties that you think can't be worked out by January 1?
Your next two points again appear to restate the same issue -- that the fiscal impact could be higher than was anticipated. How much higher?
Your last point is simply the truism that we don't know what we don't know.
So, it looks like 3 issues might be "coming out of the woodwork." Before we deny taxpayers 70 million dollars in tax relief each and every year (or $35 million, if we delay it 6 months), it might make better sense to analyze the nature and scope of those issues. We have plenty of time to do that.
The issues weren't significant enough to even warrant discussion of a delay in all-day leadership meetings on Tuesday. To sound the alarm bells the next day for immediate action (which would have the effect of lifting another $35 million from taxpayers) -- when the provisions won't go into effect for another 7 months -- seems less like measuring twice and cutting once than it does flopping around with scissors.
In any event, it's nice that you have the blog so that we can discuss these issues.
I would be very interested in having the Senate address the 3 issues in more detail: (1) does Rep. Ferry's bill correct the retailers' problems and, if not, should we scrap that bill; (2) what are the insurmountable difficulties in distinguishing food/non-food items; and (3) how much higher do you think the fiscal impacts could be and what is your source?
They are serious questions, and I'd like to have the Senate's perspective on those issues. Of course, if they won't discuss these things with the House (in person, on-line, or otherwise), then they won't. That's simply a stopper. Without discussion, most House members likely are left to believe that some Senators are just bristling over passage of a bill that they don't like.
posted by steve u. at 5/19/2006
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2 Comments:
Steve, thanks for bringing this debate to the "table." With recent inaccuracies found in the fiscal projections for the total tax reform price tag for the flatter tax proposal, legislators should be wary about how much the bifurcated food tax reform will actually cost the taxpayers of Utah. As I see it, however, we have an extra $70 million just laying around on the table (previously "earmarked" for Personal Income Tax reform) nobody seems to agree on how we're going to return to the taxpayers. This should put Senator Eastman at ease -- a little bit, maybe, for the time being. Perhaps we should just hold onto the PIT $70M just in case bifurcation erroneously costs us TWICE what we were expecting. (At least until a deputized auditor can verify the accuracy of the numbers.)
Craig,
Thanks for the comment. It seems we're all a touch dubious now about the accuracy of the Tax Commission projections we've been using. It will be very nice (assuming the bill passes) to have extra sets of eyes reviewing the numbers.
I'm not aware, however, that anyone (other than the Senate Site) is suggesting the numbers used to determine the food tax estimates might be in error. If they have a source on that, it would be nice if they'd share it before the Special Session. I've been doing some investigating, and can't find anyone (other than the Senate Site) suggesting that the Tax Commission's errors spill over into the sales tax arena.
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