1 March 2017
“Infrastructure tax” is a weasel term for “sales tax”
Sen. Mike Phillips (D-Bozeman) and Rep. Dave Fern (D-Whitefish) have asked for bills that authorize local option sales taxes. Neither bill has been introduced, but preliminary drafts are posted on the legislature’s website.
Phillips’ bill, LC0249, dated 20 December 2016, is listed as having the short title of “Allow local option sales tax.” The draft bill’s title, “An Act Authorizing a Local Option Tax of Up to 4% on Designated Goods and Services,” omits “sales,” but it’s clear from the context that the tax is a sales tax.
Fern’s bill, LC1136, is in it’s second iteration. The first draft, dated 20 December 2016, is virtually identical to LC0249, is titled “An Act Authorizing a Local Option Tax of Up to 4% on Designated Goods.” The second draft, dated 28 February 2017, has a wordier title, “An Act Authorizing a Municipality, a Consolidated City-County, Or a County, By Vote of the Electorate, to Adopt a Local Option Infrastructure Tax on Luxury Goods and Services,” that omits the tax rate, which is set in Section 4 at four percent or less.
LC1136’s short title (Section 1) is “Local Option Infrastructure and Property Tax Relief Act”
LC1136 names the tax for the projects (infrastructure and a little bit of property tax relief) the tax will finance, not for what is taxed (sales). Under this principle, the fuel tax, colloquially known as the gas tax, would also be named the “infrastructure tax” because it finances roads. LC1136 also finances streets and roads. At least 25 percent of the “infrastructure tax” revenue must be dedicated to property tax rebates.
Calling a local option sales tax an “infrastructure tax” is not going to fool anyone. A sales tax by any other name is still a sales tax, and Montana’s voters know the quack of a sales tax when they hear it. LC1136 emits the unmistakable sound of the sales tax quack played fortississimo. Calling LC1136 an “infrastructure tax” may make people dance in the streets, but they may fancy-foot the pitchfork march instead of the love thy legislator waltz.
Even with a properly descriptive title that admits the truth that LC1136 is a sales tax, this bill will be hard to pass. Most Republican legislators are ideologically opposed to new taxes, no matter how regressive, unless they are offset by reductions in income taxes. Democrats may be split on the issue; some want to build things, but others dislike sales taxes on principle.
The current draft of LC1136 tries to limit the sales tax to luxury goods and services, which is a considerable improvement on the measure’s first draft. It will, however, make Christmas presents and a grease burger at Deep Fat Freddie’s Diner more expensive: “‘Luxury goods and services’ means a gift item, luxury item, rental motor vehicle, or other item or a service normally sold to the public or to transient visitors or tourists.”
Whitefish enacted a local option sales tax, officially a “resort tax,” that proponents claim is working well. Maybe so, but I no longer buy burgers in Whitefish.