To the Editor:
Facts! Strange and scary things. Those who find them frustrating and disagreeable often simply ignore them. Indeed in some circles facts are considered downright unsociable and never invited to the best parties. However, as we begin discussing state tax reform, we might want to take a moment to look at a few facts when it comes to revenue in Virginia.
Fact! In fiscal year 2003 there was a $13.1 million state sales tax exemption for non-prescription drugs. There was a $294.1 million reduction in taxes for those aged 65 or older. There was a $48.1 million exemption for sales tax on food (.5 percent reduction). Individuals and families below the poverty level received a $17.5 million tax credit. Military personnel receive a break on their first $15,000 in compensation, at a cost to the Commonwealth of $3.1 million. Subtractions for contributions to Virginia's Prepaid Tuition Plan amount to $3.3 million. Neighborhood Assistant tax credits total $3 million. A sales tax exemption for optometrists and medical practitioners amounts to $1.6 million.
Fact! Our corporations received a $24.9 million tax reduction from double weighting of sales tax in corporate state income taxes and a $7.4 million job tax credit. There was a $17.6 million tax credit for "Enterprise Zones." Our suffering coal fields received tax credits totaling $49.5 million, while car tax relief cost $874 million (at the 70 percent level).
Fact! Altogether 56 state tax credits and tax reductions total almost $1.4 billion for fiscal year 2003 alone and over $1.5 billion in fiscal year 2004, and represent a special deal for thousands upon thousands of Virginians each year.
Fact! These tax cuts and credits amount to an 11.4 percent reduction in the general fund.
And, "fact!" our state tobacco excise tax at 2.5 cents per pack (lowest in the nation) brings in only $15 million a year.
These and many other tax credits and reductions may very well be good public policy. Certainly, no one would criticize, for example, tax breaks for our service men and women. A similar statement, however, cannot be made for encouragement of smoking by keeping our tobacco excise tax at its current level.
Shunned and forgotten as these facts may be they do not support a few assertions. First, we need a better budget; a budget that is accountable, understandable and comparable. Second, despite what some may want you to believe the state has not been raising tax rates over the past 10 years; indeed, it has been lowering them dramatically. And, third, it is the localities, which have seen the greatest increase in tax burdens ... driven in too many instances by unfunded mandates from the state and federal governments. Indeed, two of the major recommendations of the now defunct Joint Subcommittee to Study and Revise the Tax Code of Virginia were to place a moratorium on new sales and use tax exemptions and to impose no new state unfunded mandates. A good starting point.
Gary A. Reese
State Delegate (R-67)