Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 26, 1992 TAG: 9201290312
SECTION: EDITORIAL PAGE: D-2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
VIRGINIA CAN AFFORD A TAX INCREASE
OVER THE past week and a half, we have called for a half-cent increase in the state sales tax; for higher excise taxes on alcohol, cigarettes and gas; for changes in the income tax that would mean bigger levies on some Virginians.So what would the taxpayers' total tab come to? About $1.2 billion, give or take a few mil, for the 1992-94 biennium.
The breakdown? Sales tax: up $420 million. Gas tax, assuming a 50-50 share with bond issues to offset the shift of sales-tax road money to education: up $210 million. Alcohol and cigarette taxes: up $400 million. Income-tax increases ($380 million) minus income-tax cuts ($135 million) minus federal-tax offsets ($75 million): up $170 million.
At $1.2 billion, this isn't "revenue enhancement" or "recapture of tax spending" or whatever other euphemism might be dreamed up. This is a full-frontal-nudity call for raising taxes.
But:
Virginia can afford to do it.
Oft-interred in the budget-cutting pain of the Wilder years is the fact that Virginia, already a low-tax state, has become a lower-tax state. In total state and local tax revenues per $1,000 of personal income, according to U.S. Census Bureau figures, Virginia in the 1988-89 fiscal year ranked 42nd among the 50 states and District of Columbia. By the 1989-90 fiscal year, according to recently released figures, Virginia had dropped to 44th.
Granted, the most recent year for which data is available ended more than 18 months ago. But in the interim, many other states have adopted general tax increases, while Virginia has not. Almost certainly, Virginia is no higher on the list today than it was in 1989-90; it may have dropped a notch or two.
Our tax proposals would not make Virginia a high- or even a medium-tax state. If they had been in place in 1989-90, and if you assume a modest discount for inflation since then, Virginia would have ranked 39th or 40th. If enacted for the 1992-94 biennium, given tax increases in other states, our proposals might not put Virginia even that high.
Increases in state taxes are affordable in another sense, too: Most of the money will be recirculated in Virginia. Unlike federal taxes, no state and local tax revenues are spent on foreign aid or maintenance of a military presence overseas. Nor does Virginia have the federal government's problem of massive debt, whose servicing includes payments to foreign lenders.
The state would still be under pressure to search for better, more efficient ways of doing things. The increase would be too little - $840 million for schools, $400 million to $500 million for all other items - for anyone in these tight times to take it as an open invitation for reckless spending.
Virginia can't afford not to do it.
There's nothing inherently wrong about being 44th - or, for that matter, 51st - in state-local taxation. What's wrong is being there at the cost of the commonwealth's long-range future.
The state needs money to end the threat of extinction to such valuable - and relatively inexpensive - amenities as public television, libraries, the arts. It needs money to keep state-worker pay increases, however small, at least within the realm of possibility.
Above all, the state needs money so it can again emphasize those things that offer promise of future payback.
The escalating costs of dead-end programs - mainly Medicaid and prisons - reflect the inadequacy of past investments in such areas as public education, preventive health care and anti-poverty programs.
But because those escalating costs are soaking up state revenues, future-oriented investment is becoming even more inadequate. Without a tax increase, it's a vicious circle that will remain unbroken.