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Fri., Oct. 1, 2010

Editorial: Tax on candy, pop imperfect, but needed

Initiative 1107 would repeal tax levies imposed on candy, soda pop and bottled water by the Washington Legislature to help close the budget gap

Proponents of the initiative isolate the taxes and ask if they are fair.

No tax is when disconnected from budgetary reality. Why tax property? Why tax gasoline? Why tax TV sales? It’s because government needs revenue to deliver services.

So why not cut services? Plenty of services will be slashed in the aftermath of the Legislature’s cuts in the spring, and more cuts lie ahead to close a $4.5 billion revenue shortfall. Services were also cut in two previous rounds of budget cutting.

For instance, the Department of Social and Health Services announced on Wednesday spending cuts of $168 million, which will result in the elimination of 380 jobs. In addition, workers already facing 10 furlough days will get two more tacked on. The cuts are on top of the 2,000 positions the agency has slashed in the past two years. Meanwhile, the Medicaid program will be hit with $113 million in cuts that will reduce prescription drug aid and children’s health insurance subsidies.

That’s just the beginning. These reductions are part of the governor’s call for immediate 6.3 percent cuts across state government. Once that’s ended, lawmakers will still be faced with a $3 billion hole.

I-1107 proponents say the taxes it would repeal raise such a small amount as to be unhelpful in balancing the budget. Yet repealing these taxes would drain $250 million to $300 million from the state treasury by 2013. The recent DSHS and Medicaid cuts amount to $281 million, meaning similar-size cuts would be needed if I-1107 passes. That is not insignificant.

It’s true that the state has been slow to fix the structural deficit that goes beyond the pain inflicted by the economic downturn. Employee pay and benefits need to be cut. The number of services the state provides needs to be aligned with the ability of taxpayers to finance them and the necessity of government to perform them. But this will be a multiyear endeavor.

Quite simply, spending cuts can’t do it all; the state needs this revenue now. Complaints from lawmakers about these taxes ring somewhat hollow, because nobody stepped forward last session with an all-cuts budget.

We agree that the illogical distinction between which candies are taxed and which aren’t is a confusing drawback, but that isn’t enough to justify an outright repeal. The notion that these taxes are a slippery slope to widespread grocery taxes isn’t persuasive. The public wouldn’t go for that, and lawmakers know it.

We don’t like the idea of raising taxes, but we’d rather swallow these limited increases on non-essential items than the service cuts.

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