Current Republican Senate President and former Speaker of the House Scott Sales, in a recent radio interview, suggests the GOP back a sales tax, saying that they should do so to eliminate our state income tax. Given Montanans’ historical opposition to the sales tax, Sales’ advocacy on behalf of the GOP reminds me of the proverbial tale of the frog and the scorpion.
A scorpion asks a frog to swim it across a river on its back. The frog hesitates, afraid of being stung by the scorpion, drowning both of them. The scorpion argues logically, that if it did so not only would the frog drown, but so would the scorpion and certainly the scorpion wouldn’t engage in such self-destructive behavior. Considering this logic, the frog agrees, but midway across the river the scorpion does indeed sting the frog, dooming them both to a watery death. As they start to sink, the frog asks the scorpion why he would do that. The scorpion replies that he couldn’t help it; after all, he is a scorpion and it’s in its nature.
Apparently, when it comes to a sales tax, the Montana GOP can’t help itself — wanting to impose it even though that might well be self-destructive. Republicans have argued that Montana needs the revenue for services, that we need the sales tax to cut other taxes and/or that tourists will carry the tax load for Montanans.
Let’s recall the history. In 1971, culminating a four-year battle involving GOP support for a general sales tax, Montanans got to vote on the issue. Solidly backed by Gov. Tim Babcock and two consecutive GOP speakers of the House, the 2 percent general sales tax got near unanimous Democratic opposition, resulting in a referendum. In a November 1971 special election, voters opposed the sales tax and it wasn’t even close as 70 percent opposed it, pushing the GOP into minority status for a decade. The GOP political scorpion stung.
Two decades later, Republican Gov. Marc Racicot’s 4 percent general sales tax couldn’t pass the 1993 Legislature because of Democratic opposition. This sales tax promised to remove some individual and corporate income taxes and property taxes while putting just a little into education. So, it was put on the ballot again in a special election in June of 1993. This time, voters rejected it even more with 74.5 percent voting against. The scorpion stung again.
Now, 25 years later, here we go again. GOP leadership proposes a sales tax to eliminate state income taxes (deserving another column). The tourism angle was addressed in a recent newspaper column, presuming that tourists could take a big tax load off the back of Montana taxpayers. After all, there are only 1 million Montanans but there are 10 million tourists a year.
While this is not in-depth economic analysis, let me do a few “back of the napkin” calculations. Assume the 1 million Montanans spend 350 days a year in Montana, producing 350 million resident spending days. Assume the 10 million tourists average four nights in Montana, producing 40 million tourist spending days. Tourists then count for only 10.2 percent of spending days while Montanans account for 89.8 percent.
If that analysis is close to correct, imposing a sales tax to capture tourist money to help Montanans’ tax burden is political malarkey, with 90 percent of the sales tax burden being carried by Montanans.
Also, certain tourism expenditures are already sales-taxed — the 7 percent bed tax and 4 percent rental car tax further reduce any net benefits to Montanans from a GOP-supported general sales tax.
Here we go again. Will Republicans march forward? Will the scorpion again sting?