This changes everything
By D.J. McGuire | Thursday, September 30th, 2010 | Policy
When the McDonnell Administration revealed its plan to get the government out of the liquor business, I had my concerns – and I wasn’t exactly quiet about them.
After some further review, I decided the problems with the plan were smaller than I thought, but they hadn’t disappeared. In particular, there were two new taxes that I felt were unwarranted – the 2.5% “optional convenience fee” and the 1% wholesale receipts tax (euphemistically dubbed a “license charge”). I called them tax increases, several bloggers expressed disagreement (Mason Conservative, Brain Schoeneman, VA Blogger – albeit in various comments, rather than posts – and Jim Hoeft among them).
Well, I could say the Governor himself agreed with me, but rather than kick that hornet’s nest again, I’ll just say he rendered the symantic discussion moot, because the taxes are gone (Richmond Times-Dispatch):
The revised plan, endorsed today by a gubernatorial subcommittee on government reform, would eliminate the proposed 2.5 percent optional tax on restaurant alcohol sales and a 1 percent tax on wholesale liquor sales.
Folks, this changes everything. Simply put, the McDonnell ABC privatization plan no longer includes tax increases.
Clearly, the Administration decided the $26.5 million that would have come from these taxes wasn’t really worth it after all. Good for them. I would also note that I do not agree with the Wine and Beer Wholesalers’ Associations on the nature of the new excise tax (here’s why).
There were many of us who were concerned that McDonnell hadn’t learned the lesson of the Summer 2008 special session (namely, that Republicans and tax hikes don’t mix). Thankfully, we can put those fears to rest now.
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Former candidate for Board of Supervisors in Spotsylvania, current blogger, economics teacher, and long-rumored windbag. There are two causes closest to the heart: steering the country away from the social democratic nonsense that is sinking Europe, and convincing the rest of the "rightosphere" that the NBA really is a joy to watch.
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Comments
17 Responses to "This changes everything"
[...] Cross-posted to BD [...]
Frankly, every initial claim on this topic made by the McDonnell administration has turned out to be false, making one question why this dead duck is still around. It increases the outlets, it decreases the money made now that goes to the General Fund, it favors large corporations, and it will increase job loss in the Commonwealth.
So why would a Governor risk his reputation on legislation that appears to fail on each of the initial criteria he set forth? The answer is, none of those criteria actually matter. The unstated objective is to…”cut the arms and legs off government so it can be drowned in a bath tub.”
Frankly, that is the true objective of McDonnell, the Speaker, and the anti tax Delegates; if the revenue to the State is less, no matter, it helps to starve the beast. The only benefit of this process is to make manifest their true objective which is to cut government, no matter the effect on services, programs, or infrastructure.
Education, public safety, courts and justice, and especially local governments, beware. You will bear the brunt of this sale if it occurs.
The provision never included tax increases. Now it doesn’t include the taxes that D.J. didn’t like.
Just wanted to be precise.
Mike, seriously, the conspiracy theories and regurgitated Grover Norquist quotes from twenty years ago don’t make a lot of sense. No Republican, no matter how fiscally conservative, is going to argue against transportation and infrastructure spending and that’s what the money from the ABC privatization is slated to go for. Republicans have been advocating for public infrastructure spending as long as the party has existed, and the non-Kenny Golden Whigs before them.
McDonnell is trying to find ways to fund the things that need funding without raising taxes. Granted, have a billion and a half dollars not being used by the inept Kaine Administration is nice, but we need double that and more to get us where we need to be.
Actually Brian, I agree that they advocate for these improvements, but of course, by signing the no tax pledge, they ensure that these objectives can never be met. So essentially they lie; that is, don’t believe a word they say, look at what they have done. McDonnell has had many opportunities to weigh in on the side of improved transportation infrastructure, but that just pads his resume. When presented with the opportunity, has he delivered? Regretfully, the answer is no, he reverted to his anti tax past. Why? It got him elected. That is the new definition of leadership in the republican party.
I’m going to resist the temptation Brian is dangling before me, since the Governor rendered the discussion moot.
In re transportation, I would humbly submit that one of our problems is that the state is responsible for subdivision streets, which is really common area asphalt and should be maintained privately. I love my subdivision streets, but not enough to consider it logical that any of you (readers, commenters, or posters) should be paying for them.
If I read the appropriations right, the Commonwealth spends about $600 million per biennium on subdivision roads. If I am right, that’s a serious misallocation (if I’m wrong, I’m sure Brian will tell me).
Sorry to put a damper on things, but there is NO legal requirement that the ABC money or tax, fee etc. revenue from whatever source MUST be spent of fixing roads regardless of what any ABC authorizing statute states.
That is why I have introduced my Transportation Constitutional Amendment which prevented the permanent diversion of road money elsewhere. But that hass never passed the state senate although it has been voted on by the full senate.
Bob,
Thanks for reminding us all why we like you so much.
Bob, the Governor has said that all of the money from the ABC privatization plan will be used on transportation.
Are you saying the Governor is lying?
Brian: I think what he’s saying is that the governor doesn’t fully control the budget and certainly can’t control what future General Assemblies might do, absent a constitutional amendment.
By scapping the taxes doens’t the governor’s plan now blow about a $46 million hole in the budget?
He could fix that pretty simply. Why are we selling permanent licenses. Why not have an annual renewal fee, which would patch the whole in the budget and give the state a recurring stream of revenue from the sale of the ABC stores?
Also, JLARC or some independent entity needs to do an audit to determine the actual worth of the business before we sell it. It’s worth more than $500 million.
[...] Well, it appears that the two fees / taxes / ? are no longer an issue. [...]
Del. Marshall,
Thanks for your continued thoughts and contributions to BD. I have a ton of respect for any legislator who is willing to come into the public arena and hear from and engage with concerned citizens.
My particular question with your bill is why do we want to lock-in a guaranteed revenue stream?
While it is highly unlikely that the commonwealth will ever get rid of the transportation line item in the budget, shouldn’t future legislatures have the flexibility to mark-up the budget as they see fit without being so restricted by such an amendment?
We send representatives to Richmond to make the hard decisions of where, when, and how much money will be spent on certain core government services – why do we need an amendment telling future legislatures what they shall and shall not do? If we, the citizens, don’t like how they’re budgeting, we elect someone different. What am I missing?
DJ, sorry to hijack your article…just need to vent a little toward Mike.
@Mike
And to all the RAISE MY TAXES supporters, your posts are confusing. As a small business owner, I pay more to the federal, state and local government (in taxes) and stimulate the economy more than any of these politicians ever have. It’s called economic growth! While Washington’s tax and spend government is taking over all my business decisions (and yours) with 2,000+ laws along with ridiculous regulations through the EPA, OSHA, etc. our economic growth is suffering because of it? Mike, where do you think your third world roads (infrastructure) will fall in government priorities in providing free healthcare, affordable education and federal union workers pensions?
As you are, I’m not worried about what I can get from someone else (i.e. redistribution). My concern is providing a service/product that someone needs so they return. Enhancing other’s lives…and people do return to our business. Meanwhile, good ole Barrack Obama, Nancy Pelosi, Harry Reid and Tax cheat Geithner has their hands fully extended.
As a business owner, I cannot take the risks necessary in expanding my business because Washington feels that they must make the decisions for me. They provide NO confidence by breaking CONTRACTS with the takeover of GM (and screwing their shareholders), giving me additional responsibilities with healthcare and financial reform and how I’m going to tell one of my employees that I must let them go. …and you demonize me when it’s your infamous government that’s causing me to make these decisions. Unlike them, I must operate in the black (that means a profit). Our government cannot even pass a damn budget, developed a $1.4 trillion deficit and their thoughts of raising revenue are to increase their costs (taxes). Their services suck and even you’re complaining about them! So, why do you continue to go back for the same service? I have some ocean front property in Arizona, would you be interested?
Sorry for the rant…I’m just tired of idiots telling me what the right thing to do is when I’m working 24/7 to grow a business, employ people and provide a service/product that people want to purchase. Meanwhile, Congress and the President go on another vacation, write 2,500 page bills and play class/race warfare with their constituents!
McDonnell and true conservatives (myself included) want LIMITED government. Thank you,
JJ: While it was an entertaining rant, I’m not sure what it had to do with ABC privatization.
DJ-agree with you on subdivision streets. Turn them over to the counties the way the cities have to maintain their own streets. The added benefit is the potential for aligning land use and transportation planning.
John, I actually do exactly the same as you; that is, I run a business, I try my best to expand it, I value my employees and their contributions, but frankly, different from your view, I value and appreciate the function of government. We need good roads, good schools, functioning courts and justice systems, and human services in the communities in which we do business. We feel no burden from current tax rates, and particulary in regard to transportation, would gladly pay double the fuel tax of $0.175 if we could get better roads, bridges, and tunnels. The Governor has broken every pledge implicit in his initial ABC recommendation, and if adopted, the damage to local government will be severe.
@Steve – My point is that there are intangible responsibilities and costs that a business incurs that cannot be measured in dollars or percentages. Since you do not understand that, I can see why you would find my rant entertaining.
@Mike – Yes, I value my employees by providing them with a better working environment, higher pay, relaxing responsibilities and job security. Not sure how increasing a $0.175 fuel tax is going to be severely damaging to the local government. Guess that is from the Rahm Emanuel’s book of crisis management.
…and we’re arguing whether McDonnell broke a campaign promise by splitting hairs on the definition of a tax.
As the federal government puts a moratorium in the deep oil drilling business that has already cost over 20,000 jobs in the Gulf Coast. Just think about the money involved in the oil industry in Hampton Roads. Meanwhile, Mike’s reliable federal tax money is going to Brazil ($2B) and Mexico ($1B) for oil exploration (and Mexico is going to explore in the Gulf Coast). Glad that all this funding is being spent responsibly to fix roads, schools and the justice system. Courts and Justice System?
My concern with the ABC plan is that Virginians will now be able to buy hard liquor in WalMart. How does this create jobs? And do we really want the tequila for sale next to the taco sauce?
I would urge our Governor to make sure this plan creates jobs- by creating small, private liquor stores. The legislation could simply state that liquor will not be sold in a store where food or clothing is sold. All that is needed is language to indicate the exclusion of our food and “big box” stores.
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