UPDATE: I erred, badly, on the excise tax. As this post reveals, it is not a tax increase. The other two are still problematic, but the tax increases now total only $26.5M. Humblest apologies.
Jim Riley has the Governor’s press release on the ABC privatization plan, along with a helpful reminder that ending the government monopoly on hard liquor is very much a good thing.
That said, Jim glosses over a few things – namely the tax increases that the Governor claims aren’t there.
- The 2.5% “optional convenience fee” – I’m not as sanguine about this as Jim is. For starters, the idea that bar and restaurant owners can just go to the retail liquor store if they wish may be more a function of our unusual ABC situation than anything else. When one considers that staying with retail would also mean paying a 5% sales tax, this “option” turns into an offer they can’t refuse. As far as I’m concerned, this $19.4M in new revenue is still a tax increase, and I suspect most would agree with me.
- The “wholesale license charge” – Jim skips that entirely, and I can understand why; this is obviously a tax in all but name.
- The $17.50 per gallon excise tax – This is a little trickier, because as I mentioned here, this is in lieu of a 20% excise tax. Here’s the problem: the figures provided for the license charge (1% of gross receipts), projects revenue of $7.1M. That means $710M in sales is projected. If the old rate applies, that translates to $142M in revenue, far more than the current $111.4M (a sign of greater expected sales), but not the $175.7M that the Secretary of Finance is projecting from the new tax. In other words, this is a de facto $33.7M tax increase.
By my count, that translates to ($19.4M + $7.1M + $33.7M) = $60.2M in higher taxes every year – enough to give Democrats plenty of cover to shoot the whole thing down.
That’s what irritates me more than anything else. Without the tax hikes, the difference in revenue is still merely $80.7M per year, or less than ¼% of the annual budget. Was it really worth donning the tax-hike label, playing the voters for fools, and letting the Democrats party like it’s 2007 over less than ¼% of the annual budget (especially since the tax hikes couldn’t get all the way there anyhow)?
Don’t get me wrong; the government should not be in the liquor business, period. I’d just prefer it be sold as such, rather than as a Rube Goldberg scheme at revenue neutrality that (a) raises taxes, (b) makes it a much harder sell in the process by giving the Democrats cover to shoot it down, and (c) last and least, doesn’t even accomplish that politically artificial goal in the first place.
[...] Comments Not quite, Jim … on $500 Million For Transportatio…Phil Chroniger on On the president’s [...]
why are you worrying about the Democrats? They have a reputation for not being squeamish about taxes.
What this proves is just how hypocritical you Republican types are…always looking down your noses at those you accuse of tax chicanery and then you get a guy like this in office and he apparently can’t help but to promote a tricky-dick approach to budgeting.
All he had to do was get the state out of the liquor business – tally up the cost – and make the appropriate cuts to compensate and he’d be true to ya’lls principles and he’d be showing everyone how to do govt “right”.
Instead.. you got tricky-dick who apparently is proud of the smoke & mirrors plays…
shame on youse guys…
This is like Bush all over again at the Va level, eh?
Um, Larry? Are you slamming me for basically saying exactly what you just said?
Looks like another case of “violent agreement” here.
OMG! that is what I did, isn’t it?
sorry bout that!
:-}
[...] to sell liquor. “Convenience fee” my foot; that’s a tax. FURTHER UPDATE: As I noted here, the option is to avoid buying from retail stores, and paying the 5% retail sales tax that comes [...]
[...] to sell liquor. “Convenience fee” my foot; that’s a tax. FURTHER UPDATE: As I noted here, the option is to avoid buying from retail stores, and paying the 5% retail sales tax that comes [...]
[...] me cause for optimism. The more grief McDonnell gets from within the GOP, the more likely the tax increases go away, leaving a clean get-the-government-out-of-the-liquor-business [...]
[...] gives me cause for optimism. The more grief McDonnell gets from within the GOP, the more likely the tax increases go away, leaving a clean get-the-government-out-of-the-liquor-business [...]
[...] any plan to fund transportation that doesn’t include an increase in the gas tax. Why does anyone care what the Democrats are going to say? In the end, this is the best way of raising revenue for [...]
[...] In fact, he asserted that the tax increases don’t exist. Even though I had addressed each in some detail. So, I endeavored a new post to do it again (and cover points I had [...]
[...] In fact, he asserted that the tax increases don’t exist. Even though I had addressed each in some detail. So, I endeavored a new post to do it again (and cover points I had [...]