Editorial: Tax and Mend
As Bob Dole used to tell the story, one day he rose on the floor of the Senate and began his remarks by saying: “Now, gentlemen, let me tax your memories.” At which point Ted Kennedy jumped up and said, “Why haven’t we thought of that before?”
That anecdote might or might not be apocryphal, but it makes a point that was called to mind by two stories in Saturday’s Valley News.
On the front page, staff writer Chris Fleisher detailed the efforts of a coalition of nearly 40 health advocacy groups and hospitals to get the Vermont Legislature to enact a penny per ounce excise tax on sugary drinks. On Page 2, The Associated Press reported that some Vermont officials are considering the possibility of taxing drivers on the basis of the number of miles driven to compensate for declining revenues from the gasoline tax.
There may well be sound public policy reasons for putting these new levies in place, but as potential new features in Vermont’s already rugged tax landscape, these initiatives do carry the faint suggestion of “Why haven’t we thought of that before?”
In the case of the proposed tax on soda and some kinds of juice, the rationale is that adding a few cents to the cost per can will discourage consumption of beverages implicated in high rates of obesity and related health problems. Among Vermonters, the federal government says, 60 percent of adults were considered obese or overweight in 2011, as were 27 percent of children between the ages of 10 and 17.
The theory is that low-income groups, in which obesity rates are higher, and children are more sensitive to price increases than other groups and therefore more likely to cut back on consumption. They get healthier, and the state realizes an estimated $26.7 million in revenue that can be applied to covering health insurance subsidies for low-income Vermonters. In short, a win-win.
Except. It might not feel that way to the targeted groups, especially because things like the tobacco tax and the gasoline tax already fall heavily on low-income residents. In short, those taxes are regressive. Yes, society bears costs related to obesity and tobacco use, but at this point, when so many people are struggling economically, we tend to agree with Gov. Peter Shumlin, who prefers education as a way to influence individual lifestyle.
And speaking of lifestyle, motorists who are making good choices are creating a different kind of problem for the state. In this case, too, the proffered remedy is a new tax.
At the peak in 2006, Vermont gasoline stations sold 361 million gallons of gasoline. By 2011, the total had dropped to 330 million. From the point of view of energy consumption and climate change, this would seem to be a good thing. It appears that people are either driving less or switching to more fuel efficient vehicles, or both. (Unless, of course, large numbers of Vermonters are suddenly flocking to New Hampshire to buy their fuel.) Anyway, the problem is that Vermont’s 20-cent-a-gallon gasoline tax is falling short of raising its portion of the state’s $232 million transportation fund, just as it has for the past six years.
This trend is likely to be exacerbated in coming years as new federal fuel-economy standards kick in that require cars to average 54.5 mpg by 2025. This is leading Vermont and some other states to consider imposing a “vehicle miles traveled” tax, according to the AP. This would be calculated through global positioning system devices that are expected to become standard equipment in cars by the end of the current decade.
Again, this makes sense, in one sense. The transportation fund is drawn upon to repair and maintain Vermont’s road and bridge infrastructure, which is important to all drivers and to which all vehicles contribute wear and tear.
But again, it seems odd to us to propose an economic disincentive to switch to a more fuel efficient vehicle, thus saving money on gasoline and doing one’s bit for the environment. Not to mention that this would also amount to a tax on privacy, which drivers would be forced to cede while government tracked their every driving mile. We’re glad nobody had thought of that before.