HAS THE TIME COME FOR VIRGINIA TO RAISE TAXES?

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 10, 1992                   TAG: 9202100168
SECTION: EDITORIAL                    PAGE: A-11   EDITION: METRO 
SOURCE: JAMES C. MILLER III
DATELINE:                                 LENGTH: Medium
HAS THE TIME COME FOR VIRGINIA TO RAISE TAXES?
OVER THE past few weeks, this paper has called for increased taxes in Virginia. However, tax increases are not the answer to the commonwealth's fiscal crisis. Raising taxes during economic hard times is not only unfair to taxpayers, it is but a short-term palliative that sows the seeds of economic stagnation and fiscal despair.
Tax collections in Virginia are high enough already. From 1983 through 1990, individual tax collections per capita rose from $703 to over $1,000 in inflation-adjusted (1990) dollars. That's a 43 percent increase!
According to the Tax Foundation, on average, citizens of the state had to work until Feb. 10 in 1991 just to pay their state and local taxes. That means that on average, you worked 41 days out of each year exclusively for the state and local government.
Many hidden taxes are included in Gov. Wilder's 1992-1994 budget. In effect, he would raise taxes by delaying scheduled cuts on certain personal and business taxes.
The governor's most blatant taxing scheme is his proposal to levy a gross-receipts tax on health-care providers in the state. The notion that this tax will come out of the pockets of "fat cats" is illusory. Increasing taxes on hospitals, physicians and nursing homes will drive health-care prices up, and the new tax will simply be passed on to consumers. Aren't health-care costs escalating fast enough without the imposition of yet another tax?
What Virginia needs are new policies to foster prosperity for all Virginians. Defense cuts have left the state with a highly trained and educated work-force in need of new opportunities. Economic activity must be spurred by establishing conditions attractive to new businesses. They, after all, are key to creating jobs and increasing the tax base - both vital to the future.
Virginia's budget should be balanced on the spending side, not on the tax side. We must demand cuts in programs that only benefit narrow constituencies. We must require efficiency in government - installing a waste/fraud hotline would cost little but yield substantial returns. Total state employment is out of control and must be trimmed. Regulations are too burdensome and complicated, and must be streamlined. Redundant programs must be eliminated. Let's privatize more functions, taking the burden off all taxpayers and putting it on the user. Let's try innovative approaches such as giving parents and students a choice of schools - private vs. public, and public vs. public - as a means of improving student performance at lower cost.
Reforms are needed to break the vicious cycle of tax and spend. Let's limit the terms of our elected representatives. Let's reform campaign spending and level the playing field. Let's give the governor more veto power, so he can reduce the amount spent on any item in the budget as well as eliminate it altogether. Let's pass a constitutional amendment limiting the state's budget from increasing faster than the state's economy and prohibiting the transfer of earmarked funds to pay for general operating expenses.
Raising taxes is not the answer to Virginia's fiscal crisis, but getting spending under control is. Tax increases not only postpone the day of reckoning, but make that day - when it arrives - even worse.

James E. Miller III, President Reagan's budget director from 1985 to 1988, is a fellow at George Mason University's Center for the Study of Public Choice.

by Bhavesh Jinadra by CNB