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

DATE: SUNDAY, March 19, 1995                   TAG: 9503180033
DATELINE:                                 LENGTH: Long


GOOD GOLLY Miss Molly! I nearly wrecked my car driving home from work when I heard the tail end of a radio news report: ``A legislator who's launched a bipartisan effort to repeal the state's sales tax on food says he has more than enough co-sponsors of the bill to win passage in the House.''

What brave soul in the Virginia General Assembly had dared to resurrect this issue from the burial grounds of Henry Howell-era populism? Who among the honorables could have accomplished this miracle?

Dick Cranwell of Vinton, perhaps, the House Democrats' maestro of wheel-and-deal? Republican Del. Pete Giesen of Staunton, who in years past had easily persuaded GOP caucuses to embrace food-tax repeal?

Had former Del. Archie Campbell, Democrat of Wytheville, been re-elected without my hearing about it? Or had former Lt. Gov. Howell of Norfolk, now 74, himself come out of political retirement to cast influence anew at the state capitol?

No, no, no and no. My ears had deceived me. It was a North Carolina lawmaker, Democrat Toby Fitch of Wilson, pushing for repeal of the North Carolina sales tax on food. Pushing, as has always been the case in Virginia, against the odds.

The response of North Carolina's political leaders was depressingly familiar: Well, of course, we'd love to do it, but the state just can't afford it right now ... wouldn't be fiscally prudent.

Besides, Democratic Gov. Jim Hunt and Republican leaders in the GOP-controlled House have their own tax-cutting agenda, including repeal of a tax on stocks and bonds and reductions in the corporate-income tax for businesses. So forget it, Fitch.

Last I heard, Fitch hadn't flinched. Pointing out that repeal of the food tax wouldn't cost North Carolina's government as much as the other proposed tax cuts, he said:

``I don't know about you, but I don't see too many of our wealthy [owners of stocks and bonds] struggling to make ends meet. I don't see too many corporations struggling or deciding they can't come to North Carolina [because of corporate taxes]. But I see the faces of real people struggling every time I go to the grocery store. The food tax is regressive, unfair and penalizes the poor in our state. We send a devastating message to our working people by taxing the necessities of life. It is immoral to tax items that people must have for their very survival.''

Mercy. How long has it been since anyone in Virginia's legislature argued so eloquently for repeal of the food tax - in fact, even mentioned it? How is it that this issue, once the litmus test for gubernatorial candidates and legislative Young Turks of both parties, has disappeared so completely off the state's radar screen?

It was, of course, Howell's hallmark issue during his bids for the governor's office. And throughout the '70s, several legislators made valiant attempts to repeal the tax, but were always rebuked.

No one disagreed that the tax is regressive, that it falls hardest on lower-income citizens by taking a greater portion of their income than it takes from the well-to-do. The argument was always that the state couldn't stand the revenue loss - even though it had big revenue surpluses during most of those years.

For reporters covering the 1981 statewide races, food-tax repeal was still a critical question on which candidates needed to be pinned down. (Democrat Charles Robb, elected governor that year, was unequivocal as usual: Yes, maybe; no, maybe; but definitely maybe he'd try to repeal the tax during his term. He didn't.)

When Democratic Gov. Gerald Baliles was elected in 1985, the question was no longer repeal, rolling back, phasing out or giving rebates in lieu of repeal - but how much the overall sales tax would be increased. (The General Assembly raised it by a half-penny on the dollar to finance Baliles' road-building program.)

Democrat Douglas Wilder, elected governor in 1989, at least tried for Howell Lite: repeal of the sales tax on nonprescription drugs (often called the condoms-and-cough-drops tax). The drug tax is also regressive, but because it generates much less revenue than the food tax, Wilder was able to get a repeal bill passed. Except it was never implemented: By then the state had a fiscal crisis, and really needed the money.

Which brings us to Gov. George Allen, Republican. Allen was red-faced when the 1995 legislature demolished his plans to reduce state taxes by $2 billion over five years. Never mind his ill-conceived proposal to eliminate local-option taxes on businesses' receipts. The package essentially failed because the public thought the offered income-tax relief (about $33 a year for a middle-income family of four) was too piddling a trade for the loss of many state services and programs.

Pure speculation, but I believe public reaction would have been very different had Allen proposed phasing out the sales tax on food. The poor, the elderly, the middle class would have sung hosannas of praise for the governor, and would have threatened lawmakers with bodily harm if they didn't go along.

For all the advances in education it has helped finance since enacted in 1966, the food tax remains a hated tax. People know it is unfair - they are reminded every time they go to a grocery story - and they know Howell was right: There are numerous taxes, far less regressive, that could replace the revenue loss (about $510 million a year for state and local governments) if state leaders really wanted to.

Well, I won't hold my breath waiting for Allen to turn populist and declare, ``Henry Howell was right!'' But I'll keep an eye on North Carolina. Could it be that we in Roanoke, Richmond, Norfolk, etc., will soon have another reason to look with envy upon Charlotte, Raleigh, Greensboro, etc.?

 by CNB