By Ronda Wiggers
Montana Coin Machine
Operators Assoc. Why can't we just simply say "thank you, Montana businesses" and get out of their way?
Montana finds itself in the enviable position of a "budget surplus" and we are all scrambling to "solve" the problem.
Some want to rebate the excess collection, some want to spend it on infrastructure and others talk of building it into the budget. No matter what option, or combination thereof, is finally chosen, the most important issue is to not kill the proverbial goose that lays the golden egg.
This is easy to do when creating tax and regulatory law as the effects of the changes made are often not fully realized for a number of years. Let me explain.
The average Montana business does not keep an attorney and tax accountant on the daily payroll but instead uses the services of these professionals a couple of times per year.
Let' say that the legislature passes a great tax policy that rewards an employer for providing health insurance. They would have passed the bill in April of 2005 but it probably did not go into effect until January 2006.
Although the accountant would learn about it at one of their continuing education seminars, they would not have the opportunity to share it with their client until they bring in their tax work during the first couple of months in 2006.
The employer will take a bit of time to get the program implemented, learning the options, shopping for insurance and then getting it in place. Realistically, the program will not be used by the employer until late in 2006 or beginning in 2007.
Alas, the legislature meets again in 2007 and begins tinkering with the original law because the benefit is not being utilized. This often becomes an unending cycle if we are not patient enough to allow the law to be implemented and the effects to be understood.
The other side of this coin is that when we do have an upturn in the economic climate, it is often due to changes in tax and regulatory law that were actually passed four, six or even eight years earlier.
Another great risk involves changing the regulations on the wrong entity. Consider the purchase of a single loaf of bread.
If we are to decide that bread has simply become too pricey and we must do something about the problem, where do we begin? Is it the store owner that places the final price on the shelf and must cover their overhead? Probably not; he has to buy it from the distributor and remain competitive.
Maybe it' the distributor that trucks groceries all over the area? However, his gas prices have become fairly high. What about the bakery that makes the bread? Maybe that is where they are doing all the profit taking?
Or could it be the flour mill? After all, they charge more for the ground flour than they pay for the wheat. Or, if the price of wheat increases, do we blame the farmer that has spent the time to tend the ground, plant the seeds and wait for the harvest, knowing someday we would all want a loaf of bread?
Consistency, stability and predictability. This is what every business needs from the government.
The farmer needs to know that he will be able to market his grain many months prior to harvest in order to prepare the fields and decide on crop acreages, just as the mill needs to know they will have a reliable source of grain prior to constructing a plant.
When the government continues to change the rules for business in mid-stream, it becomes very difficult to make long term business investments with acceptable levels of risk.
Often, when the legislature is in session, I find it odd that while one committee is attempting to lure business to Montana, just across the hall we are discussing changes that would tax them right out of the state.
There are currently a number of legislative proposals to change how we tax and regulate businesses. The battle cry will be "excess profits."
We will be tempted or expected to forget that it is exactly those profits that have brought our very low unemployment rate and our budget surplus. Will taking away those profits also take away those benefits?
Maybe we should just say "thank you" and get out of their way.
Source: The Montana Tavern Times, August, 2006, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.