Friday, February 10, 2017

Fallin pushes $1.7B sales tax hike

Mary Fallin's proposed sales tax hike. Can't read all the newly taxed areas?
Click to enlarge, or view at this link.

In her State of the State speech on Monday, Governor Mary Fallin unveiled her budget plan for FY2018. One of her proposals to close the budget gap was to dramatically expand Oklahoma sales tax collections to include services, something which has never been done as far as I've been able to find.

Mike McCarville of the McCarville Report said "it appears Governor Fallin wants to tax everything that isn’t nailed down," and pointed out that Fallin is proposing "massive taxation with 164 new levies".

According to Fallin's estimates, applying sales tax to services would bring in $1,703,879,742 (that's 1.7 Billion dollars with a B) to government coffers. Of that, the state government would receive $934,247,035, county governments would get $648,274,017, and cities would collect $121,358,690.

This is essentially a 10% tax hike on small businesses and consumers across the state, as the cost of doing business and obtaining services will go up about 10%.

Fallin lists 164 different categories she wants taxed. This includes all manner of construction-related contracting services, cable TV, pet grooming, carpet cleaning, business and legal services, utilities for residential use, funeral services, medical services... the list is very long, and you can view it here.

To make it more... palatable for legislators, the Governor proposes the elimination of the state (not the county/city tax) sales tax on groceries (estimated loss of $235M) and the corporate income tax (estimated loss of $140M). She also wants to raise the cigarette tax by $1.50/pack (estimated hike of $260M) and the gasoline tax $0.07-$0.10 per gallon (estimated hike of $635M).

Who could have imagined the day that a Republican governor in Oklahoma would be requesting tax increases of nearly $2,600,000,000 (2.6 Billion with a B)...

I ran across something that may be of interest regarding this proposal of Fallin's.

On May 8th, 2003, Senate Republicans (then in the minority) held a press conference to blast House Democrats for pushing a similar sales tax expansion. Here's the press release discussing the topic.

 Here are a few choice quotes:

  • “House Democrats have proposed a wide list of new sales taxes on everything from title and abstract services for homebuyers to employment services to parking lots. This is a job-killing proposal that would damage the weak Oklahoma economy. Senate Republicans cannot in good conscience support placing this additional burden on Oklahoma taxpayers who are already hurting in a tough economy,” stated Senate Republican Leader James Williamson, R-Tulsa.
  • “The bipartisan state budget agreement already includes nearly a quarter-billion dollars in revenue enhancements without increasing taxes. Combined state and local funding for education will be at the highest level ever next year. Health care funding is being increased in the budget. Total state spending is being reduced, but by less than one-percent from this year. Do House Democrats really believe this is a crisis that justifies hurting Oklahoma families and businesses with a major tax increase?” queried Assistant Senate Republican Leader Scott Pruitt, R-Broken Arrow.
  • Williamson disputed the Democrats’ claim that their proposal is exempt from State Question 640, which require a ¾ legislative majority or a vote of the people to increase taxes.
Fallin's Secretary of Finance Preston Doerflinger (and presumably also Fallin) believe that they can accomplish this massive tax hike without the required supermajority vote ("Doerflinger noted his office’s belief that repealing sales tax exemptions would not require such a supermajority, but other efforts likely would." - link).

I've got news for you. This is a massive tax increase. If something's never been taxed, and it starts to get taxed, that's a new tax.

This absurd proposal needs to die a quick death. 2018, come quickly, and bring us a real Republican to sit in the Governor's office. Even Democrat Governor Brad Henry didn't put forward such a monstrous tax increase.


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