March 12, 2010

Excise tax cut doesn't get to root of problem

— It's an easy one: Ask a Mainer if he or she wants to pay less in taxes, and the answer will be ''yes.''

That's what the backers of a referendum campaign to halve the excise tax on cars and trucks collected in town halls all over the state are counting on.

The law would also waive sales tax and the first three years of excise tax on high-mileage and hybrid vehicles. The idea, its supporters say, is to put money back in people's pockets.

While that is a generally a sound concept, where the money will come from is a problem. Excise taxes are a major source of revenue for municipalities, and whatever they lose will have to be made up somewhere else.

Since that is likely to be property tax, this should be seen as more of a tax shift than a tax cut. As long as the same Mainers who feel overtaxed rely on municipal governments to provide services, these costs would not go away.

A better way to lower the tax burden would be to regionalize services and cut the cost of government. As long as every town has its own school, police and public works departments, the cost of services will be high and will need to be supported by taxes.

Which may be the motivation behind this effort. Cutting municipal revenues could result in starving governmental units and forcing them to find a way to deliver services for less.

That doesn't jibe with past experience, however. When governments lose one source of revenue, they are more likely to raise taxes than cut services. That's why school budgets keep increasing, even when state aid is frozen.

So the question shouldn't be, do you want to pay less in taxes? We know the answer to that one.

A better question would be, would you part with some local control if it would save you some money?

Could you live with a school superintendent two towns over instead of one just down the street?

Could you stand to have your 911 call dispatched from a regional center? Do you care where the plow truck parks at night?

These are the kind of reforms that would reduce the cost of government and lead to tax cuts. They depend on people's willingness to give up something besides a tax bill.

If that was the referendum question now in circulation, we'd be all for it. But if the question is whether we want to shift the burden from one tax to another, well, that's an easy one too.

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