Opinion By Mark Staples
Montana Tavern Association A recent poll by Lee Newspapers found a large percentage of Montanans would favor increases in so called "sin taxes."
The poll results aren't really that surprising. Most people are going to vote to impose taxes on someone else rather than face either service cuts or tax increases themselves.
We're quite certain those polled, however, were not told before being questioned the full extent of the current taxes on hospitality items and the weight they already carry in Montana's economy. We suspect, if they were so informed, their take on the matter might be completely different.
Let's take gaming first.
It was originally centralized in its enforcement, regulation and taxation over a decade ago to achieve two primary purposes: (1) rescue local governments from deprivations of tax freezes and budget cuts; and (2) rescue small hospitality businesses--and their mammoth employment rolls--from declining revenues brought about by ever more strict alcohol laws.
In just over a dozen years, both purposes have been served dramatically: Almost $600 million in direct tax has been produced that has translated to up to 20 percent of most local governments' budgets, saving services ranging from police to road crews to parks. Montana licensed businesses are now paying a total tax load of about $74 million a year (in 2002).
At the same time, the businesses licensed for gaming employ over 22,000 Montanans, and this year alone, will spend a billion dollars, mostly on goods and services from other Montana businesses and professionals.
The gaming businesses pay a gross sales tax on their gaming sales of 15 percent!--this in a state where people gnash their teeth over even a suggestion of 3-4 percent sales tax on other items. Surely, by any measure, gaming is paying more than it's share and doing more than it's part to keep Montana's employment and economic engines running.
Meanwhile, between state and federal taxes on alcohol and beer, less than half the cost of a glass or a container of either is spread between the retailers, growers, manufacturers and distributors that provide it to Montana consumers. All the rest is already taken by special taxes.
These pursuits and simple pleasures are, for the overwhelming majority of Montanans, enjoyed responsibly and as a sociable part of a working or middle-class lifestyle. There is nothing "sinful" by any reasonable definition in the responsible and moderate pleasures that most Montanans take from these activities.
Nor are there anything but modest profits being garnered from the provision of these activities by businesses to the public. The net income of licensed businesses, as established by the Montana Bureau of Business and Economic Research at the University of Montana, is only 8.5 percent; that's before the business person pays his or her own income tax! The net to the retailer on the sale of beer or alcoholic beverage is probably even less.
These are simply not items that in any fair "tax reform" should be singled out for further onerous treatment. They are already taxed dramatically higher than almost any other item of commerce or entertainment now in the state of Montana.
Montana is not alone in the U.S. in its ongoing budget struggles. One can argue ad nauseam whether it was previous tax allowances or too many programs that led us to this point. Inescapable in the analysis however is the fact that "9/11" did abet a horrendous burst of the 90's economic bubble, and what we could afford and spend in boom times is not available now.
It is grossly unfair to take this nationwide faint in economic wherewithal and place the responsibility for it's resuscitation at the feet of the hospitality industry which has already taken the recessionary punch on the chin right along with everyone else.
Any tax reform instituted to help Montana gain its economic footing should be just as broad based as were the causes for the loss of that footing in the first place.
Source: Special Reports,
Jan. 2002, published by Continental Communications, 125 W. Granite, Suite 102, Butte, MT 59701.