If the Proposition 29 tobacco tax passes on June 5th, it could kick off a negative trend of targeted taxes on products and services. Supporters of the tobacco tax argue that they wrote the measure to direct how taxes would be spent because voters don’t trust legislators to handle their tax dollars appropriately.
Walling off tax dollars with an unaccountable bureaucracy is not an answer for taxpayer angst, either. However, this “ballot box budgeting” — meaning the tax is designated for a specific purpose and cannot be altered by legislative action – could gain traction if Prop 29 passes. That would be a bad thing for California’s problematic budget.
For a business community wary of regulations and taxes and fees that weigh down their trades, the fear of activists and legislators targeting taxes on products and services is a real one.
Last week the Richmond city council voted to put a measure on the ballot to tax sugary beverages with the funds going to fight obesity. This is similar to AB 669 proposed last year, which was designed to fund a new program through a newly created Children’s Health Promotion Fund with a tax on sweetened beverages.
Like the scheme in Prop 29, the proposed program would depend on a tax structure from a diminishing resource as fewer and fewer users of the products over time reduce the revenue take. The new programs would ideally disappear but that is not the nature of government programs. Like Frankenstein’s monster, when you think you’ve killed them off, they come back to life – demanding more tax money.
There are plenty proposals from legislators and even activists who look to the initiative process to tax some product or service and pay for a new or existing program. Consider the mattress tax in SB 1118 in lieu of a mattress recycling, or even SB 2441 to tax strip clubs and dedicate the money for rape centers.
One idea was filed as both a legislative bill and an initiative – an oil severance tax dedicating the revenue for higher education.
It seems everyone wants to raise revenues and decide how those revenues would be spent because no one trusts the legislature to fund their projects.
On the end of all these targeted tax proposals, are the businesses that see fluctuating costs, bureaucratic paperwork and diminished sales.
Advocates of more government spending continue to offer ways to secure additional revenue while at the same time making it more difficult for the job creators to grow the economy and produce the revenue government legitimately needs.
For California’s budget and tax system, passing Proposition 29 to boost the idea of ballot box budgeting would be another brick on that famous road paved with good intentions.
(Hat tip to CalTax for pointing out many targeted tax bills to me.)