As this issue of the Mississippi Business Journal went to press last week, a bill phasing out the sales tax on groceries and upping the tax on cigarettes had passed the Legislature and was awaiting action from Gov. Haley Barbour, who planned a January 18 press conference to divulge his plans.
Whatever the governor does — well, did — with this bill, the legislation and the debate surrounding it has put the subject of taxation on center stage.
At first blush, the bill appears to be good law: lower the tax on groceries that everyone, rich or poor, must pay and raise the tax on those aggravating smokers. In an MBJ Online poll we posted recently, 73% of our readers favored passage of the bill. After all, it’s touted as being revenue neutral since the increased cigarette tax could make up for the loss of tax revenue from exempting groceries.
Mississippi currently has one of the highest grocery taxes and one of the lowest cigarette excise taxes in the nation. However, notwithstanding the current situation, opponents of the bill worry that cutting the grocery sales tax would hurt small towns that rely on those taxes to continue operating. Gov. Barbour opposes any tax increases and has said that, with Katrina recovery in front of us, we shouldn’t be cutting taxes either.
Naturally, and appropriately, the various health- related organizations, including the American Heart Association and the American Lung Association, favor passage of anything that would stymie smoking.
So, what should be done?
What about our expectations?
Avoiding taxes has always been the American way. “Don’t tax you, don’t tax me, tax that guy behind the tree.” Working to minimize our share of the tax burden through manipulation of loopholes in the law has become a favorite pastime. So, anything that lowers our taxes must be a good thing. And, to my way of thinking, that is true as long as we simultaneously lower our expectations of government services.
I doubt that, over time, the increased cigarette tax will compensate for the lost grocery sales tax. Fewer people are smoking and increasing the price will encourage others to quit. If we raise the tax too high, we’ll create a black market situation and people will spend $25 in gasoline to save $6 for a carton of cigarettes. So, what we’re really saying is that we want to make government smaller. I’ll vote for that any day.
However, our national dependence on government indicates that not all citizens feel the same way. We like to say we want smaller government, but do we really? Just in my small circle of acquaintances I am aware of lots of folks who manipulate the system to get rid of granny’s money so she qualifies for Medicaid. This is in stark contrast to my friend who qualified for free school lunches many years ago and whose father told the principal that his family didn’t accept charity.
Smaller government? Yes, for everyone but me — that seems to capture how many of us really feel.
Cutting back, but what?
If the cigarette tax hike doesn’t compensate for the lowering of sales tax, then which government services do we want cut?
The sad truth is that making government smaller is going to be tough. Every government program and every government service has a dedicated clientele who are convinced that it is their birthright to continue getting from government whatever they are now receiving. Further, politicians are not above proposing to cut essential services and leave the lard alone to create a hue and cry against any cuts at all. Sad, but true.
I believe that our ever-growing dependence on government is weakening our nation. Dependence on anything or anybody is the antithesis of self-reliance. Clearly, we must rely on government to defend our beaches and enforce criminal and property laws. From where I’m sitting, though, it seems that we have expanded the definition of “basic government service” to include an expansive lineup of perks and programs for an absurd number of special interests and situations.
Smaller government? Indeed. It makes me wonder about where all of the fiscal conservatives have gone.
I believe that the strongest argument for smaller government was put forth recently by Gov. Barbour at a workforce training meeting. He remarked that government is good at spending money but not good at achieving results.
There you have it. However good government’s intentions are, they just don’t score well at getting things done. Government dollars without motivated clients result in money spent and people’s lives unchanged.
And, in my judgment, motivation to improve life is stymied for millions of people because they have been brainwashed into thinking they can do nothing on their own. They must wait for some government program to pick them up and change their lives. With no scientific evidence to support my conclusions, I’m convinced that poor people would be better off if government quit holding out the false carrot of public programs as solutions for every discomfort and inconvenience and told people the truth — mostly, you’ve got to do it on your on.
So, what has all that got to do with lowering the tax on groceries? Just this: cutting taxes reduces the size of government and forces people to be just a little more self-reliant. Independent, self-reliant people are free people and deserve to enjoy the liberty that makes America such a great country. If we don’t deserve to live in a free society, we’ll lose it.
Thought for the Moment
Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. — President Ronald Reagan
Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.