Bacon's Rebellion

Democracy Thrives in Sunlight

Enough Already with the Secret Tax and Fee Hikes

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by

James A. Bacon
in

Gov. Bob McDonnell has repeatedly asserted that the government of Virginia managed to close a $1.8 billion shortfall in the Fiscal 2010 budget “without a tax increase.” (See his column in the Wall Street Journal.) That may be true from a technical viewpoint but it leaves a few things unsaid. I won’t even get into the complex deal by which the commonwealth effectively borrows money from the Virginia Retirement System and repays the sum as part of a larger pension overhaul. More to the point is the matter of some $95 million in higher “fees” in the biennial budget, plus multimillion-dollar reductions in targeted tax breaks that bring the total to $137 million.

The accompanying chart from the House Appropriations Committee shows the grab bag of additional fees inserted by the General Assembly into the budget legislation during the last day of the 2010 session. There are two issues here.

First, when is a “fee” not a fee but a tax increase? I would argue that a fee becomes a tax when the revenue generated by the fee exceeds the level needed to provide the related government service. By that definition, how many of the above are fees and how many are taxes? I don’t know. But an honest rendering of accounts probably would suggest that the General Assembly did increase some taxes.

The second issue is the manner in which these fee increases and tax break deductions were enacted. According to Del. Robert G. Marshall, R-Manassas, they were jammed into a much larger bill at the last minute. Legislators never had an opportunity to vote them up or down on their individual merits. In other words, there was minimal transparency. It makes me sour and argumentative to see fees and taxes increased in this manner.

Marshall has a solution. He proposes an amendment to the state constitution as follows:

Any law that appropriates funds shall not contain any provision that imposes, continues, increases or revives any tax, fee, or fine, nor shall any such law contain any provision that reduces or eliminates any credit, deduction, or exemption associated with any tax, fee or fine.

Personally, I happen to dislike tax credits and exemptions as a tool of public policy and think many if not all of them should be eliminated on the grounds that they provide preferences not available to the general public and that they reduce the tax base. On the other hand, I also believe in transparent government. If anyone has an argument in opposition to Marshall’s amendment, I would like to hear it.

(Marshall provides a bit more information about his proposal here.)

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4 responses to “Enough Already with the Secret Tax and Fee Hikes”

  1. Gooze Views Avatar
    Gooze Views

    Jim,
    I think you are on to something with the "fee" moniker. Corporations have long done so to keep their prices seemingly smaller if they separate the "fee" from the price. It is a lie, of course. Governments can do the same and make it sounds as they they haven't raised "taxes" but really have.

    Peter Galuszka

  2. Larry G Avatar
    Larry G

    tax or fee? I think a fee only applies to those getting something that others won't get unless they pay a fee.

    This is an important distinction in my view because a tax implies that everyone should pay even if not everyone gets something back.

    A secondary consideration is what things should the government be selling for a "fee" that could not be provided by the private sector?

    But methinks McDonnell is not making any such distinction anyhow and is just using the word 'fee' so he can avoid using the dreaded "T" word.

    and I find it hilarious that McDonnell claims that we can fund transportation for offshore oil drilling.

    How is that?

    OH Because he says we can TAX …IT….

    so ever the no-tax Republicans walk and talk taxes and when some new business might pop up – it immediately become the next cash cow for us to spend rather than "taxing".

    So you done a good job Bacon.

    McDonald was a favorite of Groveton.

    He even retired his "Richmond Clown Show" insult to smooth the way for his guy.

    And now look at what we have.

    Why… this guy.. he's doing the same thing…. HORRORS.. that Warner and Kaine were doing…

    WOW!

    No wonder McD sort of avoided the Tea Pots at the convention center, eh?

    Here's why McDonnell is proving to me.

    He knows in his heart that you can't fix transportation in Va without an increase in money.

    But he's apparently painted himself into a corner.

    So ..we'll have to rely on Marshall for the pro-forma no-mo-tax answers to govt?

  3. Larry G Avatar
    Larry G

    I think Dems are allowed to play the fee vs tax game if they want but most Dems say tax.

    The no-mo-tax folks like McD though seem to be not able to stay within their self-avowed anti-tax lanes which leads the more cynical among us to think that such people are hypocritical.

    I would expect the Dems to latch on to the tax idea with each new opportunity but here we have McD …without even a sniffle – salivating at the prospect of taxing the oil companies that would offshore.

    Does anyone else find the almost automatic assumption on the part of McD that these companies should be fair game for govt taxation?

    From what I can see – McD is on the hunt for money.

    He does the VDOT audit and finds out that some work has been deferred so we are told this is "found money" for which we can do other transportation projects – never mind that the money was already allocated for existing transportation needs.

    I get Jim Bacon Credit for calling out McD on these tax&spend machinations that make Warner/Kaine look like Kindergarteners.

    If McD thinks he is building a national resume.. the man needs a sit down talk about being who you say you are.

  4. Hydra Avatar
    Hydra

    I don't know what makes us think we will be better off by troubling ourselves with individual fees for everything we do something.

    Freedom has to be paid for, of course, but I think it is wrong to treat it like piecework, paid for as you use it, as if no one else has a stake in it.

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