Greenwood Commonwealth. June 20, 2023.
Editorial: A Bolder Look At Sales-Tax Cut
Brandon Presley, the Democratic candidate for governor, has released tax proposals that are very different from those advocated by Gov. Tate Reeves and most of his fellow Republicans.
Presley, given that he’s not a Republican in a conservative state, still must be viewed as a long shot in this year’s general election. Even if that turns out to be the case, he may have performed a public service by presenting two tax-cutting alternatives for future discussion, both of which have been aired in various forms and by various individuals running for public office in the past.
Presley proposes to eliminate the state sales tax on groceries, which a number of states, including Texas and Florida, two members of the GOP’s income tax holy trinity, already have done. Presley also wants to cut the cost of car tags in half, which is sure to get the attention of counties that depend on that revenue.
To get more attention, Presley should have gone further on the sales tax rather than just focusing on groceries. The general sales tax has been at 7% since the early 1990s, when lawmakers overrode Gov. Kirk Fordice’s veto to raise the rate.
Maybe it’s time to consider reducing it to make Mississippi a regional bargain, since many Southern states have a higher total sales tax than this state.
The website tax-rates.org lists the state’s sales tax and an average of local sales taxes. Mississippi has the highest state rate among nine Southern states, but the third-lowest when factoring in local sales taxes.
Tennessee may have no income tax, but it makes up for that in part by sticking it to consumers. Its state-plus-local sales tax average is 9.45%, highest in the South. Arkansas is next with a 9.2% average, followed by Louisiana and Alabama at 8.91% each, although Alabama’s is certainly going to come down after recently cutting its grocery tax in half.
Mississippi allows very few local sales taxes, so its state average is 7.07%. Somebody ought to explore how reducing the rate to 6% would affect state revenue.
The reason nobody has done this is because cities get a percentage of each month’s sales taxes. Reducing sales tax revenue without adjusting the formula for payments to cities would be, gently speaking, a political disaster.
But it’s just math. Somebody at the Department of Revenue could figure out how the state would take the reduced payments and keep the cities’ revenue intact. As for complaints that a lower sales tax rate might put state finances at risk, nobody in authority put any stock in that argument when state income taxes got substantially reduced in the last couple of years.
In truth, a general sales tax reduction is unlikely, whether Reeves or Presley wins the election. But with Alabama’s recent action, that will leave Mississippi as the only Southern state that taxes groceries at the full sales tax rate. Certainly that policy should be reviewed.
It may be appealing to continue pushing to eliminate the state income tax. But as a matter of public policy, the 7% sales tax hits hardest at people of modest means, making a difficult financial situation a little bit more challenging.
The sales tax is out of whack with the state’s tax-cut mindset. The topic deserves a look.
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