This article first appeared in the St. Louis Beacon, Feb. 10, 2011 - New state Auditor Tom Schweich is staking out a controversial position on the initiative-petition proposals to replace the state's income tax with a sales tax, by declaring this afternoon that there is no way that his staff can accurately determine the financial impact of such a switch.
By law, every ballot issue that comes before Missouri voters must include an estimate from the auditor's office of the financial impact. But Schweich says the initiative proposals " are so broad that the fiscal impact cannot reasonably be predicted."
By taking no position, Schweich -- a Republican -- could find himself thrust in the middle of the ongoing legislative debate over the tax shift. Some legislative leaders within his own party are promoting the change.
"While I discount the dire predictions of state bankruptcy, I also cannot in good faith predict that the petitions will have little or no fiscal impact on the state," Schweich said in a statement this afternoon. "While I prefer to quantify risks where possible, for the foregoing reasons, it would be inappropriate for my office to attempt to prospectively quantify the effects of these broad initiatives."
The nine initiative petition proposals call for a state sales tax of no more than 7 percent (it's now 4 percent or 4.225 percent), replacing the state's individual income tax. Some of the proposals wipe out the state's corporate income tax, while others do not. Some allow sales-tax exemptions for certain types of spending, such as education, while some do not.
All nine are crafted by Let Voters Decide, a group that largely has been bankrolled by wealthy financier Rex Sinquefield, who opposes income taxes and led last fall's successful drive to restrict or ban local earnings taxes.
The initiatives are in addition to similar bills being considered by the Missouri Legislature.
Backers call the shift the "Fair Tax,'' and say a change from an income tax to a sales tax could attract more economic development in the state. Opponents say the change would ravage the state's budget and could prompt Missourians to travel to neighboring states with lower sales taxes for major purchases.
The Missouri Catholic Conference is among the opponents who contend that the switch would increase taxes on the elderly and the poor.
Some financial analysts, including state budget director Linda Luebbering, have said the new sales tax would need to be 14 or 15 percent to replace the amount collected with the state's current income of 6 percent.
Schweich said that debate influenced his decision to provide no estimate of fiscal impact.
He explained: "State law limits the fiscal note summary to 50 words. The proposed fiscal note summary for each of the nine petitions reads as follows:
'The total cost, savings, and/or change in tax revenue to state and local governmental entities cannot be determined. The proposal (1) requires a range of legislative action with unknown outcomes, and (2) will result in changes to consumer spending patterns that cannot be presently quantified.'
"It is the duty of the state auditor to provide fair, unbiased fiscal notes and summaries for initiative petitions, estimating the fiscal impact of the initiative, and I take this responsibility seriously,'' Schweich said. "But it is also my duty to inform the voters when initiatives are so broad that the fiscal impact cannot reasonably be predicted. That is the case with each of these petitions.
"To assist in drafting the fiscal note and summary, my office received input from 22 public entities," Schweich said, as well as experts on both sides of the issue. Still, "the cost and savings estimates for each of these petitions ranged from an unknown or no fiscal impact to a projected state budget shortfall in excess of $1.02 billion."
"While the nine different petitions varied slightly, they all contained ambiguities; the fiscal impact of each of the petitions is dependent upon undefined variables related to legislative actions required and changes in consumer spending, none of which can be predicted at this time."
