Webster

The Constitution was made to guard the people against the dangers of good intentions." --American Statesman Daniel Webster (1782-1852)


Monday, June 13, 2011

wonder why most people don't trust government

You won't see it on your receipt from the state's liquor stores. And it's downright difficult to find a reference to it on the Pennsylvania Liquor Control Board's website.
But the Johnstown Flood Tax is still there, hiking the cost of anything you purchase at one of the state stores by 18 percent.

The tax was enacted June 9, 1936, weeks after the St. Patrick's Day flood devastated the Cambria County city. As originally proposed, it was a 10 percent tax on liquor store purchases to raise money for relief from the flood.
And it was supposed to be temporary.
"It had raised around $40 million by the early 1940s, and that was what they were looking for to cover the cost of repairing flood damage," said state Rep. Jim Marshall, R-14, Big Beaver. "It should have gone away at that point, and it didn't."
The tax not only didn't come off the books, but members of the General Assembly raised it -- twice -- in the 1960s, to 15 percent in 1963 and to the current 18 percent in 1968. And despite outliving its intended life by about 70 years, it's proven to be resilient; Marshall said it brought in about $250 million to the state's general fund in 2010, and that's a tough figure to just give up.
"There have been a number of attempts to end the flood tax, and none have been been successful," Marshall said. "There are two more bills up this session, and we'll see how they do."
Piling on
Ask opponents of the tax, such as Philadelphia-based beer and spirits writer Lew Bryson, and it can be tough to get them to stop talking.
"You can't say that the tax is double-dipping. It's actually triple-dipping," Bryson said. "And it's a hidden tax. It doesn't show up anywhere, and until a few years ago, I don't think many people even knew it existed."
Bryson said that after a federal excise tax (which varies based on the proof and quantity of the liquor; for a fifth of 80 proof, it's $2.14) is added to the original cost, the state adds a 30 percent markup. The 18 percent flood tax is calculated after the excise tax and state markup. The state's 6 percent sales tax is then tacked on, making the price consumers pay roughly twice what the state paid.
"It's a tax of a tax of a tax, and another tax or two is added on top of that," Bryson said. "It is no wonder that we have one of the highest prices for liquor or wine in the country."
But Bryson said what might be his biggest problem with the Johnstown Flood Tax is a matter of simple transparency.
"Even if nothing ever changes with the tax, it would somehow make me feel a little better if they just changed the name," he said. "It hasn't been a Johnstown Flood Tax for decades, so let's at least be honest and call it the 'Pennsylvania Commonwealth Drinking Tax' or something."
Marshall said he has a similar problem with the tax.
 I got this from here

I have stated many times that once government gets an income stream, it gets addicted to the money.


"This is the perfect example of why the people don't trust government," Marshall said. "A temporary tax that's been on the books for 75 years? Named for a purpose that was accomplished in the 1940s?
"My concern with the Johnstown Flood Tax isn't so much a fiscal one," he added. "It's more of a concern about it being a cause for doubt or suspicion of what government does."
Two more tries
The state's complicated system of rules for alcohol sales has received a fair amount of attention since last November's election, as a Republican governor and Republican majorities in both houses of the General Assembly have people thinking that big changes, including privatization of the state's liquor stores, could be on the way.
Those issues, including the Johnstown Flood Tax, have come up before. Could this be the year that something finally changes?
"I think there's a pretty good shot at changing the tax ... or doing something bigger (with alcohol sales)," said Rep. Rob Matzie, D-16, Ambridge. "That's certainly an issue that the majority wants to take a look at."
Marshall said there are two House bills, both of which he has co-sponsored, to eliminate the flood tax; one would cut it next year and the other would phase it out by the start of 2015. The bills, both written by Republicans, have been referred to the House Liquor Control Committee for consideration.
"You have to be careful about replacing the revenue or reducing spending somewhere else," Marshall said. "But I think we have a pretty good chance with the flood tax this session."
Matzie said he'd need to see more information about the current tax, where its revenue goes and how the money could be replaced before committing support to one of the two bills that address the tax.
"In general, though, a phased-out approach would be the right way to go," he said. "I don't think it's a bad idea, but I want to see some more specifics first."
For Marshall, though, the answer is easy.
"This is a move to do the right thing," he said. "A temporary tax to fix something needs to stop when the something is fixed. That's what we need to do here."

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