The highly influential Mississippi Economic Council is touting a House proposal that will take about $50 million out of the state general fund at a time when state tax collections are declining and multiple state agencies are facing cuts and layoffs.
MEC believes that money should be diverted from the general fund to a program to improve what the business group and many others say is a quickly deteriorating state and local transportation system.
There are multiple studies and evidence to support the proposition that the state needs to spend more on infrastructure – a lot more.
The House plan – supported by MEC – would divert the 7 percent tax on retail items sold to Mississippians by online retailers to transportation needs. Under a U.S. Supreme Court ruling, the retailers are not required to collect the tax, but through efforts of Mississippi Revenue Commissioner Herb Frierson many online retailers are voluntarily collecting the tax for the state.
Under current law, any revenue collected for the state by the online retailer goes to the general fund and is available to spend for education, health care, public safety, state parks – a whole litany of state programs.
It should be noted that it will take much more than the estimated $50 million collected by the online retailers to prevent most all of those agencies from having to absorb additional major cuts.
The House proposal, supported by the MEC, would divert those funds to a program to improve the state’s transportation system, both on the local level and on the state level. In the final days of the legislative session one of the major issues to decide will be whether the Senate agrees to the House proposal to divert those funds to transportation needs.
The MEC has for more than a year advocated for a new revenue stream for a major program to repair the transportation system. While the MEC has not specifically identified a source of revenue for its proposal to spend an additional $375 million per year on infrastructure, the most talked about funding source is an increase in the tax on gasoline.
Mississippi’s 18.4-cent per gallon tax on gasoline is one of the lowest in the nation. The MEC has made it obvious it would support increasing it.
It should be pointed out that in recent years, the MEC, the state’s chamber of commerce, also has advocated for cutting taxes – primarily for businesses.
The MEC‘s supported reduction in the tax on inventory paid by businesses is taking an estimated $125 million out of the general fund. Plus, the MEC strongly backed legislation that passed that changed the method of collecting taxes on business, costing the state general fund another estimated $100 million.
And the largest tax cut backed by the MEC or at least backed by many of its members, a cut for corporations and on personal income, is estimated to take $415 million in today’s dollars out of the general fund over a 10-year period.
In each case, the MEC and others argued that those tax cuts, with most of the benefits going to large corporations, will be good for the state economy in the long run. They will make the state more competitive, the MEC and other groups argued.
Now the MEC is saying revenue needs to be raised someway – presumably through a tax increase – to pay for transportation needs across the state. The MEC says transportation improvements are needed to make the state more competitive and to grow economically.
Perhaps, the MEC and its allies on both the tax cuts and tax increases are right on both counts. Maybe, both are needed and in the long run the state will prosper by cutting taxes on businesses to make them more competitive and raising some other taxes to make the roads and bridges better.
But in the meantime, a lot of state agencies – from schools to health care to pubic safety – are going without state funds right now.
» Bobby Harrison is the Daily Journal’s Capitol correspondent. Readers can contact him at (601) 946-9939.
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