I have not had an opportunity to keep up with this year’s legislative session in Iowa due to being distracted by the Primaries and Caucuses.
The Des Moines Register has hit a couple of retail related topics this weekend. On one I agree with them, and the other I do not.
The Register is right! Regarding existing Grocer Subsidies (Jan 19 Register Editorial), the paper’s position is that state subsidies of the transaction fees on food-aid cards (which replaced food stamps a few years back) needs to stop. I could not agree more. It is unthinkable that along with reducing the handling cost associated with the paper solution that was once in place we would subsidize a cost that the grocer happily considers part of the cost of doing business on normal credit card transactions. I should have know about this before, but just learned this weekend. We’re giving the grocers free money! The legislature needs to repeal this giveaway now.
The Register is wrong! Regarding the proposed Bottle Tax (it’s not called that yet, but that’s what it is), the Register gets it right (unlike Jan Mickelson at WHO Radio, who insists on calling this a “fee”) by calling it a tax. Does anybody have a bottle or can redemption program where you pay one amount and get less back on a “deposit”? That’s going to get really confusing and difficult to work with. 10-cents paid at point of purchase, 8-cents back when you return it. If we’re going to tax people, let’s do it honestly and more easily by making it 12-cents paid and 10-cents returned… at least it will be easier to calculate. More importantly, people need to know when they are being taxed… lying and calling it something else is just wrong. And of course, the “reason” for the tax (as the Register also stated), that is REAP (Iowa Resource Enhancement and Protection Program), is only getting part of the state moneys from the new arrangement. They get 1-cent. The grocers and other handlers gets 1-cent. The uncollected deposits, which currently go to the distributors (5-cents today), would now go to the state (8-cents under the program). And the new plan expands the products covered by the program (which I would support). The state plans to take the 8-cents ($13 million estimated) and drop it into the general fund. Nice. Assuming, of course, that the level of non-returns remains static, I bet… I bet that’s a bad assumption.
Why does the Register support this? There’s a couple of reasons. One is that they want to see more money go to the state parks, waterways, beltways, bike paths, etc. That’s a noble cause, really. Where we have real needs, the money needs to be allocated. However, here’s the Register’s supporting reasons for the additional tax: 1) only 25 to 35 percent of requests are funded. 2) Iowa is 48th in per capita spending on recreation. Reason number 1 is a classic argument that assumes that all requests are necessary and should be funded. Reason number 2 is on the face of it playing to our competitive spirit, but not a valid logical argument. It assumes that those in 46th, 47th, 49th, and 50th are at unacceptable levels, but provides no evidence to support that… statistics lie. I’d prefer to argue on the merits of the actual needs, which I’m sure that the Register feels they don’t have the space to provide… or maybe they don’t really have enough information to support this at all. It seems this kind of spending is why we have a financial problem at the state level this year. Creating new taxes to cover new spending is wrong. Wrong.
The second reason. Perhaps not overt, but the Register is always going to sit on the side of financing recreation for Iowa to help generate interest in the state… I don’t necessarily disagree with this if the people really want it, but I don’t think people understand that part of the discussion and are going to be too focused on the confusion around the numbers of the new bill. The Register doesn’t help the situation either by refereing to it as a “tiny tax”… $33 million is “tiny”? Give me a break. It will certainly seem tiny to each individual Iowan… but I’ll bet it’s just a start… like gambling in Iowa “we’re just going to do a lottery… no casinos”. You mark my words 10 years from now if we let it start here today, the return amount will drop to 5-cents by 2018.
(By the way, the only real discussion I’ve heard from Iowans so far on this topic is related to the cost of handling returns and the conditions at some grocery stores… I think the grocers should be more than happy to handle these… it brings the customer’s back, and if they’ve got issues covering the cost of handling, they can raise the price of the product to address it.)
We need to get our priorities straight… both of these topics have something in common… the State needs to cut spending. We have to cut, and adding just makes the cutting look stupid. Adding ANY new spending has got to be a critical need. REAP just isn’t critical, sorry.