March 31, 2007

Predictably, The News-Enterprise endorsed the twice-rejected restaurant (meals) tax proposal again.  But the logic used by the paper--like the logic used by the ETCB and other supporters of the tax--is flawed.

In its first error the paper says of the tax, which is proposed to pay the tab--to the tune of  31.5 million dollars over twenty-five years  (when interest is added to the $18 million dollar prinicipal amount of the bonds being issued to finance city projects)-- "In business, that would be called an opportunity."

Actually, in business, it would be called sizable long-term debt.  And a business can not pass an ordinance forcing its customers to give it their money to finance loans for capital expenditures. 

The second flaw is the paper's admonition to "do it quickly."  Everyone likes new ballparks.  However, the question remains:  Should the city mortgage the prosperity of this generation and all generations of children to come for the instant gratification of building ballparks right now; even if it means borrowing $18 million dollars and piling another new tax on our citizens?  Even to E'town's biggest tax and spenders, the answer to that question should be "NO."

The admonition "to do it quickly" is the language of emotion.  This is the same kind of thinking and emotion that causes individuals, families and governments to borrow money for things they really can't afford in the heat of the moment.  The practice of hiding behind bonding schemes to conceal an addiction to overspending  has been going on for too long.

The Historic State Theater complex has been making steady progress. The council has already budgeted $300,000.00 toward the sports-complex this year alone, out of existing revenues. Wouldn't it be more fiscally responsible, and less burdensome on our taxpayers, to proceed with these projects as is currently being done-- like a family saving up for a major purchase-- instead of plunging the city into over thirty-one million dollars more in debt repayment, and dumping another tax on our citizens?

Consider this question:  If the ETCB had been successful in passing a 3% meals tax for a convention center in 2005, would it now be back to raise it another 3% to pay for the sports-complex and finish the Historic State Theater project?  Where does the demand for more of our take-home pay end? 

The third flaw is when the paper says:  "Elizabethtown City Council demonstrated a propensity for responding to the loudest voices when it rejected the restaurant tax proposed in 2005 to finance a convention center." This is dead wrong.  The council responded to the overwhelming number of voices heard in opposition to the tax in 2005.  There is absolutely no reason to think those numbers have changed.  

Fourth, the paper says:  "A large percentage of the tax revenue, if the license plates of vehicles parked daily outside Elizabethtown eating places are any indication, would come from out-of-town visitors. . ."  But that is also wrong. The great majority of the tax revenue would come from local taxpayers. Only a small percentage would come from out-of-town visitors.

Proof of that is 2006 National Restaurant Association statistics showing 85% of all meals purchased at quick-service (fast-food) restaurants are purchased by local customers; and from 60% to 85% of all full-service restaurant meals are purchased by local customers. Overall, a whopping 77% of the meals purchased in restaurants are purchased by local customers.  Therefore, it is local customers who will pay 77% of any restaurant (meals) taxes collected.

If the ETCB feels more funds are so desperately needed now, then let them raise their motel room taxes (which are lower than Louisville's), instead of imposing a meals tax (Louisville does not have one), so that out-of-town visitors bear all of the burden.

The fifth flaw is the paper's reference to the tax as a "small tax."  This proposed tax would not live in isolation.  It would be one more needle added to the overwhelming haystack of city, county, state and federal taxes already sitting on the weary backs of local taxpayers.  To call it a "small tax" ignores that fact. And some families will find it more burdensome than others. 

Every tax that has ever been enacted has just been one more "small tax."  But then it lives forever--and sometimes even grows--as the city's occupational tax did last year, when it was increased by an astounding 69% (from .8 per cent to 1.35 per cent).  The problem is not too little money collected.  It is too many projects committed to, without the money to pay for them.  This would be just one more fiscal mistake added to the viscious cycle of past fiscal mistakes.

Supporters of the tax ask you to think of "30 cents on a ten dollar meal", or "$1.80 on a $60 meal", as if you or your family will only eat out once each year.  The truth--again according to National Restaurant Association statistics-- is that an average-sized family with a household income of $59,000 per year will pay at least an additional $80 per year ($2,000 more over 25 years) in meals taxes, at a 3% tax rate.  Average-sized families with incomes averaging $70,000 or more will average paying approximately an additional $129.24 in meals taxes a year ($3,231 more over 25 years) at a 3% tax rate, because they eat out more.

Secondly, being a regressive tax, it would be an even heavier burden for people with less income. The poor, the disabled, and fixed-income individuals and families--including some children, some adults, and some eldery-- are in this group.  Every dollar taken for restaurant taxes would be one less dollar these strapped families have for shelter, energy, school clothing, groceries, health care, insurance, transportation and the other essentials of life.  Every restaurant tax dollar collected would be one less dollar available for anyone to spend at a local restaurant or any other local business. There is no such thing as a painless tax. A pint of blood is a pint of blood, whether taken all at once, or one drop at a time.

Give city government more money and it will spend every bit of it, and then--at a future date--it will be back asking for more, as it is being asked to do now, after just raising the occupational tax 69% last year.

Now is the time for the Elizabethtown City Council to stand up for  all of the taxpayers, and not cave in to the relentless full-court press the ETCB, the Mayor, and The News-Enterprise have been conducting for the last two years. Council members are being hounded by the supporters of the tax.  Those supporters have the loudest and closest voices.  But the overwhelming majority of local taxpayers would still vote against this tax, given the chance.

Here's hoping council members won't forget that as they are faced with the pressure being placed upon them by a small group of the powerful and well-connected.