Economy wrong for sales tax hikes
1) Borrow money from Mr. Banker in order to continue living at our present level, and maybe even buy a new car or refrigerator in the process.
2) Cut back on expenses and wait patiently for the terotechnologist to come home and put the national house in order.
Similar to others with an intelligence level nestled somewhere between Einstein and a Teletubby, we always choose door No. 2, cutting back where needed and basically doing without until monetary trends do an about-face.
However, government thinks different.
Government’s intelligence level is either so high that the rest of us are too dense to comprehend its long-term strategy, or it is so low that even Tinky Winky would have to burrow in a hole to look it in the eye.
Government always seems to choose No. 1, in part because they are their very own bankers, but mainly because of one very simple concept based upon centuries of experience: They can.
Regardless of your government’s choice of style – whether it be democracy, communism, monarchy, dictatorship, or the Taliban-preferred anarchy – its choice of rules governs changes on a daily basis.
With that in mind, consider two of the tax increase proposals that now will be on next November’s ballot:
1) A 0.5 percent increase in the town’s 4 percent sales tax, as well as a 1.5 percent increase on short-term lodging accommodations to be used toward paying off $46 million in debt incurred in selling bonds to fund a new conference center in Lionshead.
2) A 4 mill increase in property taxes to be used for the maintenance of town infrastructure and “some” capital projects.
Let me get this straight. Sales tax receipts have been as flat as the sales of rear-entry ski boots for seven years in a row. They don’t cover nearly as much of the town’s budget as they did in the past, yet they are going to attempt to increase it in order to take on more debt?
Don’t get me wrong, I am all for the conference center. But hoping to fund at least part of it through an already declining revenue source is like calling your broker and demanding he purchase 10,000 shares of Enron, WorldCom and Tyco – each – because you just know that they will come back someday.
This is not just a gamble, it’s tax-funded suicide based upon intuitional hunches that the market will turn around, and thus the national economy, providing hundreds of thousands of tourists with millions of dollars that they might eventually spend in Vail.
I have been for a conference center of some sort ever since Pepi’s ill-fated Congress Hall back in 1987 (I still think the name doomed the entire project), but now is not the time if this is the only choice for debt repayment.
Yes, in every instance it has been an issue, there are plenty of pessimists saying, “Now is not the time!” But it actually fits this time around. The economy hasn’t been this bad in decades, and there is no guarantee anything at all is going to turn around anytime soon.
Compare this with our current drought. We’re running out of water, we don’t know when there will be any more, and we’re protecting what little we have until then. This is basic door No. 2 philosophy.
And to top it off, they are currently “borrowing” from capital projects in order to meet everyday expenses, a concept that has proven successful year after year with such governmental agencies as the Social Security Administration.
The property tax increase is at least a more stable choice. No, it’s not an either/or proposition on the ballot, but when have you ever seen one tax increase pass in Vail, much less two?
Councilman Moffet was correct almost a year ago when he began insisting that the “fair and equitable” way toward making the town pay for itself was by raising property taxes, not sales taxes. Just because a resort-based business model worked well 20 years ago does not mean it works well today.
Moffet argued that an increase in property taxes would hit those who, according to town staff, generate the highest demand for town services.
He was correct then, and is even more so today. Those who generate the need for services are those who should be taxed for the services provided. Second-home owners, most of whom don’t vote in Vail anyway, would shoulder the majority of the increased taxes (Avon tried to do this with their buses, but chickened out).
Just because government wants to tax its way out of a problem does not mean that we should jump on the wagon and go along for the ride. Robbing Peter to pay Paul only makes Paul happy up to the point Peter goes broke.
Vail voters have a difficult choice this November. Gamble on an unknown during the weakest local economy since there was such a thing; have the majority of those who use town services pay for them; or sit back and watch the Teletubbies with the remote in one hand and a beer in the other.
Richard Carnes of Edwards can be reached at email@example.com