Paying for Harrisburg’s Spending Addiction

How do you know when politicians have a spending addiction? A sure sign is when they start scrounging for money in ashtrays and Netflix queues.

The General Assembly recently passed a $31.5 billion budget for FY 2016-2017 that includes $1.4 billion in new government spending, which certain hardworking Pennsylvanians will be taxed to pay for. Among those arbitrarily tapped by Harrisburg lawmakers to fork over more money are cigarette and E-cigarette smokers as well as those who make online digital purchases.

This is a new level of desperation for politicians. To justify this new cash-grab, they’re claiming that these taxes will promote public health or encourage fairness. But all they do is encourage lawmakers’ spending addiction.

That addiction is getting worse by the year. The new budget is almost five percent larger than the last, and a large chunk of it is just pure pork. The General Assembly itself will get an additional $19 million of our dollars to play with. Legislators should be scrimping and saving every penny we give them—not making ever-increasing demands on us.

Smokers will bear the brunt of most of these new taxes. Per the new budget, taxes on cigarettes are set to rise $1 by August, at which point $2.60 paid on ever pack goes straight to the taxman. Electronic cigarettes—an innovativation that provides an alternative to tobacco smoking—are also getting saddled with new taxes. E-Cigarette buyers will now pay 40 percent more. Worse, the small businesses that serve these buyers will pay a retroactive tax on existing inventory. One small business owner describes this tax as "pretty much a catastrophe" for his business. (http://www.yorkdispatch.com/story/news/2016/07/14/vape-shop-calls-tax-pretty-much-catastrophe/87085890/)

On the one hand, lawmakers claim the justification for these taxes is they will discourage people from smoking. That’s just using the tax code to bully people. Worse yet, lawmakers are depending on these smoking taxes to balance the budget, relying on them for almost two-fifths of the income Harrisburg needs to pay for its new spending.

It’s also short-sighted. If lawmakers’ stated goal of getting people to quit succeeds, they’ll be imperiling the budget in the process. When smoking taxes do convince people to quit—or drive them to buy their packs out of state—these taxes bring in less money. This happened in 2014, when a cigarette tax increase in Philadelphia brought in $19 million less than anticipated.

When that happens, taxes need to be raised elsewhere or government services need to be cut to make up the difference. It’s a never-ending cycle.

Then there’s the other half of the budget’s tax-hike bonanza. It also extends the state six percent sales tax to digital purchases, such as Netflix accounts, music downloads, EBooks, and more. This tax will hit hardest on younger generations—should our state’s future workers bear the brunt of Harrisburg’s spending binge?

Lawmakers will say that extending the sales tax online is about fairness, but that flies in the face of the many unaddressed loopholes in Pennsylvania’s tax code. Lawmakers increased the handouts to Hollywood executives and other preferred businesses, while taxing others. Legislators shouldn’t be allowed to pick and choose who will pay the price for their lavish spending habits.

And more importantly, those lavish spending habits should end. There’s no rule that states that government spending has to grow unchecked year by year, yet our representatives in Harrisburg insist on doing exactly that. At the same time, they refuse to trim the waste, fraud, and abuse that are rampant in state spending. As State Sen. Scott Wagner put it, there was over $1 billion in savings overlooked in the budget.

Harrisburg politicians need to spend more time looking for savings rather than for new ways to tax us. When our state’s fiscal well-being heavily depends on people lighting up, or downloading the latest music, it’s obvious politicians have a spending addiction in need of an intervention.