Repeal Maine’s Beverage Tax…

Posted: 22/10/2008 in Uncategorized
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We’re on the final leg of this year’s political marathon, having rounded the last corner and have the finish line in sight. Therefore, I thought I’d take a closer look at some of the issues and make some decisions. Sort of. Actually, I’ve already made most of my decisions; I’m really going to argue in favor of those positions here. We have a few statewide issues to deal with, and the first one is actually question #1 on the ballot regarding the repeal of the often called “soda tax.”

Maine’s newly enacted beverage tax, like most taxes, was given birth in a closed room, with the lights off and the shades drawn so the public could not see what was happening. Sort of like the birth scene from Rosemary’s Baby. For those of you that have not seen, or don’t recall the movie you can check it out here. However, that’s the way liberal politics work, behind closed doors.

In a nutshell, this question is on a veto referendum to repeal this tax. The purpose behind the tax is supposedly to increase the funding for Maine’s Dirigo health insurance scheme. According to some reports, this program is seriously underfunded, and proponents saw this as a non-volatile way to obtain financing for yet another well intended, but ill conceived socialist program by the government of Maine.

According to legislative reports, it will cost us 2.6 cents for a can of beer, 7 cents for a 750-milliliter bottle of wine and just under 4 cents per 12-ounce soda. Just what we need, more hidden taxation to increase the cost of living. However, the biggest reason behind my opposition to this tax is not the way it was enacted, but the reasons behind its very existence.

Dirigo may have noble intentions, but in reality is nothing more than another government grab for power, as well as another kick in the shins of freedom. According to “A study done by Todd Gabe, Associate Professor of Economics at the University of Maine, found that the higher taxes would lead to the loss of 395 full- and part-time jobs in the beverage industry due to lower sales. This would mean Mainers would lose out on $8.8 million in wages and salaries.” (link here) with an economy that is currently in a failure cycle, we really need to do everything we can to increase the number of employment opportunities here in Maine, not discourage them.

Of course, the opponents of the repeal, including comrade’s Baldacci and Elizabeth Mitchell, say that the tax really doesn’t affect the people of Maine. What they are really taxing is big business. In this case, the larger distributors and bottlers of beverages sold here in Maine. They obviously do not understand how business works. These taxes may not be directly paid by the Maine consumers, like the 5% sales tax we pay, but we still are hit with it through a higher product cost.

Taxes are not absorbed by business, but passed on to the consumer as part of the cost of the finished goods. A tax is nothing more than an expense by business. In addition, being an expense, it is merely calculated into the cost of the wholesale and retail prices of what we buy in the stores. We don’t see it, so we don’t actually have to think about it. And in the long run, what we don’t know, won’t hurt us. At least that’s the premise behind this sort of taxation philosophy.

When we buy a gallon of gas there are excise taxes on both the federal and state level that are added into the pump price. When you get your receipt after paying for the gas, you do not see these taxes broken down. Since we don’t see them, we don’t complain, and in this fashion lend support and acceptance to these taxes. The same will hold true to the beverage tax. Out of sight, out of mind, and all that.

The Dirigo health system is not an effective way of covering medical expenses. With fewer enrollees, and I would presume higher risk and less healthy enrollees at the outset climbing on board, the costs incurred by payouts would be greater, and not spread out over a larger population, resulting in its funding problems.

But there are other items of malfeasance that make the bill an onerous one to the Maine taxpayer, and should be discussed in public as well. As I mentioned, this bill does not tax the consumer directly, but through business at the wholesale and manufacturing levels. But there’s more- it also takes 5 million dollars from the tobacco settlement fund, which was supposed to go towards care of people with smoking related illnesses and tobacco cessation programs.

This bill also takes 3.6 million dollars from the general fund, which would have been better used to reduce the tax burden across the board, and imposes a 1.8% surcharge on paid insurance claims. That means you get less back from the insurance companies, also increasing the cost of health insurance, which Dirigo is supposed to reduce.

I guess a good analogy here would be that funding Dirigo is kind of like a bathtub overflowing. The smart thing to do would be to turn off the water and clean up the mess. Then take your bath. Unfortunately, the democrats think that we should get a bucket, pick up the water on the floor and pour it back into the tub. Meanwhile, the faucet keeps pouring water into the tub and overflowing onto the floor. It creates a situation whereby you keep taking water from the floor in an attempt to solve the flooding problem, instead of turning the water off, which is the real source of the problem.

This referendum question, called a “peoples veto” is a step towards turning that faucet off. Taxation has become a detrimental issue to the growth of Maine as a state. We need to reduce the tax burden and figure out a way to pay the bill that we have without creating new ones. Let us pay off what we owe first. This repeal will not eliminate the Dirigo Health Program, but it will mandate a change in the way the program is funded. The state needs to learn to make Dirigo pay for itself, just as any independent business would have to do. If you cannot fund your business, then you must shutter your business. To allow the government to operate a program in any other way makes that program not a business, but a socialist handout in the form of welfare.

Vote YES on question #1 and start turning that faucet off.


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