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It
was the legendary British prime-minister, Benjamin
Disraeli, who remarked during an 1850 House of
Commons floor speech that “To tax the community
for the advantage of a class is not protection; it
is plunder.”
There
has been great hue and cry from a class of
Virginians for the General Assembly to raise sales,
cigarette and fuel taxes on all hard-working, tax-
paying citizens of our Commonwealth. That class,
largely defined, is the industrial class of Virginia.
The industrialists and developers have been
clamoring for general tax increases on our citizens,
for more money to spend on highways and education.
They contributed hundreds of thousands of dollars to
a “foundation” Governor Warner’s friends
created to carry out a slick publicity campaign to
push for the $1 billion in tax raises the governor
has requested. Thousands upon thousands of lavish,
multi-colored mailers were unleashed on Virginia
citizens, with an easily knocked out postcard that
could be mailed to each recipient’s
delegate and
senator.
Strangely,
the multi-billion dollar companies behind the pleas
for increasing taxes on the purchases of ordinary
citizens did not suggest that they would be willing
to pay their share. It was the age old story:
“Don’t tax me, don’t tax thee; tax the fellow
behind the tree.”
Clearly, the industrialists
running the largest of profitable enterprises in Virginia
were about to plunder the citizenry of the
Commonwealth. For years, highly paid lobbyists of Virginia
industries and professions have successfully slid
into the tax code sales tax exemptions for their
clients. For example, if you are a small business
owner and purchase a copy machine at Staples, you
pay 4½ percent sales tax on the selling price. When
you buy food to feed your family, you pay sales tax;
but if you are Dominion Power, you are exempted
from
paying sales tax. Fair? Absolutely not. The little
fellow pays, the big fellow doesn’t.
One
of the important aspects of my comprehensive tax
reform package, HB
108, is that it would do away
with all sales tax exemptions, billions of dollars
of Virginia taxes that special interests avoid. HB
108 received some attention during the first half of
the current General Assembly. Various delegates and
senators would discuss aspects of it with me at
meetings and receptions. Still, I was surprised when
a senior member of the Appropriations Committee told
me that members of the committee had been persuaded
by my arguments that sales tax exemptions were tax
avoidance. If
the loopholes could be closed, revenue would be
found without raising tax rates on us all.
Early
in the session, it was thought that the
Appropriations Committee could construct a balanced
budget without new sources of general fund revenue.
That failed to be the case. If a half billion
dollars in new revenue couldn’t be found, the cuts
to education and other core state government
programs would be so draconian, House members would
balk. The House leadership decided during a recent
Friday afternoon floor session, three legislative
days before House bills had to be completed, that
they would give Virginia's large industries an
opportunity to contribute to core Commonwealth
funding needs. They urged House members to remove
sales tax exemptions of the industrial giants like
power companies and railroads.
A
bill was presented to the Finance Committee late
that afternoon. The bill, HB
1488, authored by Del.
Phil Hamilton, R-Newport News, with me as the chief
co-patron, was reported by the Finance Committee
early Friday evening. The
lobbyists and liberals were caught by surprise. The
few representatives of heavy industry remaining in
the General
Assembly
Building
lined up to complain; but to no avail. It was great
theatre to watch as most of the liberals on the
committee voted against our bill. Until that moment,
they had never seen a state revenue generating
measure they did not adore. This, however, was a
Republican measure and
politics prevailed. HB 1488
passed the House almost two votes to one.
Thanks
to the generosity of Del. Hamilton and because of
the sales tax reform contained in my tax bill, HB
1488 has been labeled the Hamilton/
Louderback
bill. For the Republican majority in the House of
Delegates, needed revenues were found without
putting heavier tax weight on Virginia
individuals and families.
In addition, the sales tax base was broadened
and made fairer. I
am hopeful that HB 1488 is the beginning of a true Virginia
tax reform movement.
--
March 1, 2004
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