Sales tax hike wrong answer


It would be tough to argue with the numbers: $24,820 to house someone in jail for a year or $4,600 to treat that person’s substance-abuse problem or mental illness and allow that individual to hold a job, care for his children and live a positive life contributing to society.

This month, the Whatcom County Council will hear from agencies and professionals who will encourage it to pass a one-tenth of one percent sales tax increase to help fund mental-health and substance-abuse programs. The council can vote on the issue or put it before voters.

The need is clear. Compelling statistics as well as heart-wrenching evidence proves their efficacy. Cost-benefit analyses speak volumes for the savings to the community and reduced burden on an overcrowded jail system.

But funding such programs through a sales tax increase is not the right solution. Sales tax is the most regressive form of taxation. The millionaire who buys a pair of warm socks pays the same amount of sales tax as the struggling single father of three barely making ends meet.

Sales tax increases not only put the biggest burden on those least available to pay, they put the pinch on local businesses already coping with a lagging economy. While one-tenth of one percent is a tiny number, those tenths add up, particularly when customers are considering making large purchases, such as cars. Every tenth can cause a customer to head south on I-5 in search of a better deal. Further, sales tax is not a reliable and stable funding source, particularly in a tough economy.

This concept of government a la carte is a slippery slope solution to a complicated funding puzzle. The county would be better served to work toward restoring its authority to budget for essential services using less regressive taxes.

Voters passed Initiative 747 in 2001, capping property tax-rate increases at 1 percent per year. After I-747 was ruled unconstitutional, the Legislature convened a special session to reinstate the cap. Voters in each county can approve “lifting the lid,” but elections are expensive and unpredictable.

Washington is one of only seven states without a personal income tax. Counties have two options: property tax and sales tax. Whatcom County is one of 12 counties to have more than 50 percent of its land base in public land, which severely inhibits property tax revenue growth potential, according to a December report by the state office of Community, Trade and Economic Development.

The CTED report, commissioned by the Legislature to evaluate counties’ financial health, also urged the Legislature to provide counties with increased flexibility. The study found, “Revenue elasticity is an important tool for counties to keep pace with service requirements and labor costs.” Flexibility would be good news for businesses.

The past decade of increased restrictions on taxing authority has rendered many municipalities unable to fully fund essential services. These sales tax increases become desperate options borne on the backs of local businesses. Continuing to approve them does not address the underlying problem. It won’t be long before council members and voters refuse further sales-tax increases. That time may already have come.


Off Beat

by Rik Dalvit


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