“Sales tax is the only fair tax we have,” wrote a reader. “Can you find out how long it would take for a two percent sales tax increase to fund restoration of our highways and bridges?”
Let’s quantify the issue. The MEC/Blueprint Mississippi report entitled “Ramping Up Mississippi’s Economy Through Transportation” identified what’s needed to restore our highways and bridges:
“Mississippi currently has 24,591 lane miles of state-owned highways in need of preventative maintenance, minor rehabilitation, or major rehabilitation. The estimated cost of this work is $2.23 billion. As of June 2015, the state owns 936 bridges that are in some state of disrepair, of which 191 are posted, meaning they can no longer handle
the weight and traffic they were designed to carry. The estimated amount to repair these bridges is $2.63 billion. At the county and municipal level, the cost to repair just the 13,192 locally-owned roads and highways that are in very poor condition is $607 million. Finally, there are 2,989 local substandard bridges, including 2,200 posted bridges that cannot carry the weight they were designed to handle. The current cost to replace these bridges is $1.14 billion.”
All that adds up to a little over $6.6 billion.
Let’s look at sales taxes. Mississippi’s general seven percent sales tax plus other special sales taxes pulled in $3 billion in revenue for the last fiscal year. It’s hard to calculate exactly, but upping the general sales tax by two percent to nine percent could pull in an extra $800 million a year.
Simple arithmetic ($6.6 billion divided by $800 million) says it would take 8.25 years of the extra sales taxes to generate $6.6 billion.
The MEC/Blueprint Mississippi report says the Mississippi Department of Transportation already spends an average of $234 million a year on repairs. It wants to count that as a source of funds to catch-up on road and bridge repairs. The reality is, though, that every year new repairs are needed. For simplicity’s sake, let’s say the $234 million is needed for ongoing annual repairs and that the full $6.6 billion must be generated to restore our road and bridge system.
So, dear reader, it would take 8.25 years for a two percent general sales tax increase to provide the money needed (not counting inflation).
However, even if the Legislature agreed with you that the sales tax is the fairest tax, it’s not going to happen. But your idea was worth a look.
Another idea that is not going to happen is for the Legislature to ensure Mississippi gets an economic boost from the Lt. Governor’s plan to eliminate business franchise taxes.
Rather than just eliminating the tax and hoping that will generate business growth, the Legislature could take a different approach. Giving businesses a franchise tax credit for each new job created (and maintained), with extra credit for hiring unemployed people, would ensure employment growth while offsetting franchise tax liabilities.
Any more readers have ideas to share?