The Constitutional delegates have a huge task at hand. Of the many issues that face them is the means under which we collect money. The delegates must address these issues during their deliberations.
Taxation By far, the one institution of government that we all fear is the Internal Revenue Bureau, but it doesn't have to be that way. The Bureau collects revenues, the Office of Management and Budget makes sure they are properly administered and the Department of Finance oversees the distribution of all monies received by every source for the various programs created by law and promulgated by the executive branch. Some taxes are a burden on the ability of the population to prosper. The gross receipts tax is one such burden. It requires businesses to pay a 4% tax on the gross business they do. There is some abatement to this tax but they are meaningless to businesses that do over $150K a year. We also know that many businesses do not report all income and so the proper amount of taxation from this burden is rarely, if ever, realized. Much of our public debt is dependent upon the collection of the gross-receipts tax and so we are faced with possible shortfalls in revenues to repay the debt if businesses don't pay their fair share. The gross-receipts tax law should be repealed in favor of a sales tax. A 4% tax (could be 5%) on most of our purchases is reasonable because we already pay it. Businesses increase the cost of goods sold by the amount of tax owed, so there would be no increase in the cost of goods. In fact, prices should go down to pre-tax levels and then taxed. By taxing at the point of sale, the law could provide that certain items, such as food and medicines would be exempt. When a sales tax is assessed at the point of sale, the money is immediately available to the government. Sales taxes are traditionally collected bi-weekly. The monthly or sometimes yearly assessment of the gross receipts tax mean the government has to wait for revenues and, as we know, some businesses do not show their true incomes, thus less taxes are collected. The idea of a sales tax in a "duty-free" territory will be bothersome to many but it will help the government have a better cash-flow and thus more immediate money to provide the services we all want. It is not truly duty-free anyway because businesses must increase the cost of goods because of the gross receipts tax.
Excise taxes, road taxes and the like are also burdensome to the population but these could be eliminated as the central government gets smaller. Municipalities may be become a reality and municipalities could share in these taxes based on a mandated percentage. Because we have municipalities and thus, a reduced central government, the central government operations would not need the same level of revenues and so some taxes could be eliminated, reducing the burden on taxpayers. Of course, if municipalities (all citizens) are enjoying the additional revenues, then they may be in favor of keeping them for capital projects. The ability to control local income and spending is another reason why local control is important.
Tax exemptions to certain businesses should be reviewed yearly by the Governor to see if those exemptions really help the people. With the elimination of the gross receipts tax, all businesses would have a built-in break in their tax burden. Corporate taxation is always a function of how much profits are made. Many EDC businesses do not pay taxes at all. If the Governor decides that this helps keeping jobs, then so be it but businesses that reap huge profits by not paying taxes should be evaluated. The collection of property taxes should and must be a local, municipal function. Approximately 40 to 50% of a municipal budget will come from property taxes. Therefore, sharing of all other taxes by the central government to municipalities is critical to the revenue stream to a town or city. With proper planning and reduced government waste we can easily fully fund all the programs mandated by law through taxation, even at lower levels.
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