The economy is undergoing two significant changes - one short term and the other a much longer term transformation of the service based economy. The current "recession" has meant a steep drop in slaes tax revenues for state and local governments and the contraction of government budgets can be felt in many ways - from lay-offs, to shorter hours for government departments and services to an increasing number of cities looking to add to their coffers through new sales tax increases.
But as we begin our climb out of the doldrums, it is wise to consider just how precarious our reliance on sales taxes are. Decades ago, sales taxes generated a greater percentage of government budgets than it does now. Why? because so much of what we do today is based more on service (and therefore non taxed) services than the transfer of goods.Sacramento Bee columnist Dan Walters writes about this angst in todays news.
CCN would suggest that, like it or not, cities are entering a time where they must reconsider the nexus between what is taxed and what those monies are spent on. For decades cities have relied upon revenue streams that are quickly becoming outmoded or no longer have a correlation to how the revenue is generated and what those monies are spent on (think about the VLF (car tax), the changes in the telecommunications industry, or UUT's for example).
The easy thing to do is to continue to seek revenue from outmoded technologies or antiquated ways of doing business - essentially chasing dollars because 'we've always done it that way'. The harder, but more prudent course, is to begin a dialogue on what taxpayers are looking for from their government, what services theyre willing to pay for, and then devise a tax structure that meets those needs.
