Grover Norquist’s seal of approval for Gov. Nikki Haley’s gas-tax-hike plan might provide some relief to those 20-plus state legislators who unwisely signed Mr. Norquist’s no-new-tax pledge.
But South Carolinians should be asking themselves: Who elected Grover Norquist to determine our state’s tax policy? And why are some S.C. state legislators marching in lockstep with his Washington-based Americans for Tax Reform?
Last week, Mr. Norquist endorsed the governor’s package of income tax cuts and a 10-cent gas tax hike that would be gradually put in place over the next three years.
But the ATR founder and president admonished his legislative acolytes not to raise the gas tax without making a cut in the income tax rate as recommended by Mrs. Haley.
“Americans for Tax Reform will continue to follow these issues closely throughout session and will be educating your constituents as to how you vote on these important matters,’” Mr. Norquist wrote in a letter to the legislators who signed the “Taxpayer Protection Pledge.”
According to the ATR website, those who make that pledge “solemnly bind themselves to oppose any and all tax increases.”
According to our report, their S.C. number includes new House Speaker Jay Lucas, R-Hartsville.
Under the ATR agenda, only tax hikes that are offset by tax cuts can be tolerated. Doing so achieves what is called “tax neutrality.”
The governor’s plan, however, goes further than that. The increase in gas taxes would bring in $350 million a year after being fully implemented in three years. But cutting the income tax rate from 7 to 5 percent would reduce general fund revenue, according to a projection from state fiscal officials, by $1.8 billion a year.
Mrs. Haley counters that the income tax cut would actually bring in additional prosperity as South Carolina becomes more “business friendly.” The governor says the income tax cut would put South Carolina on an equal tax footing with nearby states, and would boost the state’s economy by attracting new businesses and giving state wage earners more income to spend.
The proposed gas tax increase would provide only a portion of the $1.3 billion needed annually to meet the state’s transportation needs, according to Department of Transportation estimates. Over the next 30 years, the shortfall in road and bridge funds is estimated at $40 billion.
Nevertheless, raising the gas tax a dime a gallon would be a start toward the goal of providing necessary revenue for longstanding road needs.
The income tax cut is less certain to provide the anticipated extra economic boost that would actually improve state revenues. Indeed, it could leave the state short on funds for essential state services, including public education.
The gas tax is designed to be a user fee, by which those who drive on the highways pay for their upkeep.
The ATR states that user fees can be exempt from its tax hike restrictions, and by any reasonable definition this state’s gas tax should be so considered. But apparently it doesn’t meet all of the ATR’s qualifying rules.
That’s no reason for state legislators to blindly follow Mr. Norquist’s lead.
The governor’s plan to lower one tax to raise another needlessly complicates what ought to be an essential and simple task for the Legislature this session.
Raise the gas tax and fix the roads. Let the people who drive on the highways pay for the improvements, to the extent reasonably possible.
And in raising the gas tax, recognize that out-of-state motorists pay at least a third of all gas taxes in the state.
Raising the gas tax, for the first time in 25 years, is a fiscally responsible plan to provide improved highway safety and mobility.