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Candidates weigh in on liquor sales, ‘sin’ taxes, online sales tax and the personal property tax

Candidates weigh in on liquor sales, ‘sin’ taxes, online sales tax and the personal property tax

Mitch Coffman
October 25, 2012
October 25, 2012

Note: This is the third of a three-part series on responses to a survey sent to general election candidates. On Tuesday, the series looked at education-related issues including Propositions 1, 2 and 3 and funding for K-12 and higher education. Wednesday IdahoReporter.com published candidate responses on health care insurance exchanges, Medicaid expansion and the budget for the state Department of Health and Welfare.

Privatizing liquor distribution. “Sin” taxes on items such as cigarettes and beer. Online sales tax. Elimination of the personal property tax.

Put your money on these issues coming up during the 2013 legislative session. The four questions were among 13 issues sent to general election candidates by the Idaho Freedom Foundation.

Privatization of liquor stores

Opponents of the liquor store privatization say state-controlled liquor sales satisfy the state constitution’s requirement that the Legislature promote “temperance” and that there will be considerable loss of tax revenue.

Those in favor of privatizing liquor sales believe the state should not be in the business of selling liquor and something that can be handled by the private sector should not be a state function.

Candidates were asked if the state should remain in the business of selling liquor, or if it should be turned over to the private sector.

Twenty-six said they support the privatization of liquor, five said they would keep liquor stores operating as a government-run operation and 20 said they were undecided.

Sheryl Nuxoll, R-Cottonwood, an incumbent for state senator in District 7 instead of District 8 due to reapportionment, supports privatization because she wants less government. “This is business that can be run privately, instead of by the government. We want to reduce the size of government. Only the private sector supports government by paying taxes—business, individual, sales and property.”

Lee Heider, a Republican running for state Senate in District 24, supports government-run liquor stores, saying simply, “The state needs to have some control over liquor sales.”

Republican Steve Bair, a candidate for state Senate in District 31, was undecided because he feels the issue needs more study. “A study was presented to JFAC several years ago, indicating that when states act as distributor of liquor, consumption is lower, compared to privatized states. If there are other studies, they would be good to read.  Further study needed.”

‘Sin’ taxes

For several years, lawmakers have been presented with proposals to raise taxes on beer, cigarettes and wine—known as “sin” taxes. Supporters believe it will help cut down on the usage of the products and raise revenue to fund services. Opponents, however, believe higher taxes will hurt businesses and do little to impact drinking or smoking.

What should the Legislature do regarding these taxes?

Just three candidates said they think “sin” taxes should be increased, 28 said they should remain the same, 10 said they should be lowered and 10 were undecided.

Dave Bowen, running for House Seat A in District 29 as a Republican, is opposed to raising the taxes, but left the door open to change his position down the road. “My position could change on this issue upon hearing the arguments, but for now I oppose increasing any taxes.”

Independent Bob Croker, competing against Bowen for House Seat A in District 29, wants the taxes to remain at the current level. “Although I neither drink nor smoke I believe that people should have that choice. Penalties for violation of age laws can help support program that better educate the public and hopefully stem the number of those entering into such habits.”

Steven Harris, running for House Seat A in District 21 representing the GOP, believes all taxes should be fair and is in favor of lowering them. “Taxes should be flat and fair. Tax policy should not be used to manipulate behavior.”

Online sales tax

Should Idaho require out-of-state businesses to collect Idaho’s sales tax on items bought online? An online sales tax is becoming an increasing talking point in a number of states looking for ways to increase revenue.

Supporters of this idea feel it is unfair for Idaho businesses to compete against an out-of-state business that does not have the same overhead burden as a local business. Opponents of the online sales tax say it’s not fair because almost no government services are required from an Internet transaction.

Candidates were spread rather evenly with their answers, with 17 saying they supported the requirement, 19 saying they opposed it and 15 were undecided.

Republican Lynn Luker, Boise, an incumbent running for House Seat A in District 15, is in favor of collecting online sales tax. “This whole issue arises because of a 1992 U.S. Supreme Court decision requiring a physical presence in a state in order to allow a state to collect tax on the business. Consequently, this is a problem that requires a congressional solution either directly or through approval of an interstate compact. The current situation places our home brick and mortar businesses at a significant disadvantage, and I believe competition should be on a level playing field. I do not view this as a tax increase issue, but rather a level playing field issue.”

Marv Hagedorn, R-Meridian, now running for the state Senate in District 14 after serving in the House, is undecided because of the current legality of the situation. A Republican, he says, “No state is allowed by federal law to collect sales taxes outside its borders. Once that law is changed by Congress, then there is good reason to find a way to level the playing field for Idaho business vs. web-based business. If a business has an outlet or store in Idaho and has a web-based outlet as well, we do work with those businesses (as a requirement) to get them to collect sales taxes. Local option sales taxes that are in effect in cities that are allowed to adopt them compound the issues of collection, as one can imagine.”

Mike Washburn, a contestant for House Seat A in District 19 as a Republican, is opposed to the idea. “I oppose any new taxes. This isn't just an issue of collecting sales tax. You're essentially creating an import tax between the states. If a law like this went into effect, I can see trade wars between the states to follow. Imagine Idaho telling businesses in Illinois, 'If you want to sell to Idahoans you must collect and pay 20 percent sales tax' or something similar. This is giving a state government power to tax businesses in other states. This ends badly.”

Personal property tax

The business personal property tax has been a much-talked about policy issue in recent years, with the Idaho Association of Commerce and Industry (IACI) being at the forefront of repealing the tax. The director of IACI, Alex LaBeau, has repeatedly called it a “bad tax.”

Candidates were asked, if during the 2013 legislative session there is a vote on repealing the personal property ax, how would you vote?

The majority of candidates are in favor of repealing the tax, with 27 saying they would be in favor of doing so, four said they would be opposed to it, 11 said they would support it with a gap funding provision for counties to cover loss of revenue and nine were undecided.

Rep. Darrel Bolz, R-Caldwell, running for re-election for House Seat B in District 10, supports repealing the personal property tax only if there is a means of replacing the revenue loss. “I am in support of repeal, but to not provide for reimbursement to the counties would be an unfunded mandate. We reimbursed counties for the repeal of the agricultural property tax and it is only fair to do so with this, a larger tax.”

Republican Ron Mendive, a House Seat A hopeful in District 3, is in favor of the repeal as a small business owner. “As a small business owner, my work has slowed way down but the tax bill remains the same. It is another burden for small businesses to overcome to survive.”

Democrat Cindy Phelps, running for House Seat B in District 8, is opposed to the repeal because of the loss of revenue it would have on smaller counties. “This would have a huge negative impact on a small, rural county.”

Note: IdahoReporter.com is published by the Idaho Freedom Foundation.


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