- The Washington Times - Tuesday, December 16, 2003

When the Virginia General Assembly convenes next month, one of the most hotly debated issues will be Gov. Mark Warner’s push to increase taxes.

The Warner plan contains some positive points, including a reduction in the sales tax on groceries; a phaseout of the car tax; increases in the personal exemption; and abolition of the estate tax for family owned businesses and working farms. But these are outweighed by the tax increases that the governor is seeking. For example, Mr. Warner proposes to increase the sales tax from 4.5 percent to 5.5 percent, to increase the state cigarette tax from 2.5 cents per pack to 25 cents and to permit counties to impose a local tax on tobacco of up to 50 cents. In addition, the governor wants to raise income taxes. Currently, all taxpayers pay an income tax of 5.75 percent. The governor wants to create a new 6.25 percent bracket for Virginians with taxable incomes of more than $100,000.

The battle lines in the General Assembly are becoming fairly clear. Although Republicans will retain a majority in the Senate, Finance Committee Chairman John Chichester, Fredericksburg Republican, has been an outspoken supporter of tax increases. Veteran observers in Richmond say that they would not be surprised if Mr. Chichester’s committee produces and the Senate approves a budget even more laden with tax increases than the governor’s proposal. The aim of this political game would be to reach a “compromise” in the end that comes very close to Mr. Warner’s tax increase proposal. “The budget coming out of Finance Committee may make Warner’s look like a conservative one,” a Republican lawmaker told us.

For conservative and libertarian-leaning opponents of higher taxes, the key to blocking Mr. Warner’s proposal will be the House of Delegates, where Republicans will command a 61-37 majority with two independents. In contrast to the Senate’s Republican contingent, the House GOP is dominated by conservatives who are rightly skeptical of tax increases. It is no accident that, when Attorney General Jerry Kilgore – Virginia’s top Republican officeholder — issues a statement or holds a press conference opposing the Warner tax increases, he is joined by House Speaker Bill Howell, Fredericksburg Republican, a conservative stalwart. But the Senate Republican leadership is notably absent.

Conservative lawmakers tell us privately that they are resigned to the reality that there will be some increase in the tobacco tax, but they are prepared to fight Mr. Warner’s proposal, which allows for a combined state and local tobacco tax increase from 2.5 to 75 cents per pack. Beyond that, we would expect House Republicans to stand firm against increased taxes and bear the brunt of an intense media campaign to depict Mr. Howell — falsely — as an obstructionist determined to bring government to a crashing halt.

Fortunately, the House Republicans are not waiting. When the General Assembly convenes next month, they are likely to present a low-tax plan to balance Virginia’s budget by reducing the rate of growth in government expenditures, instead of relying on new taxes. Thanks to the Republicans in the House of Delegates, Mr. Warner will be forced to engage in a serious debate about the future direction of government in the Commonwealth of Virginia.

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