Idaho is one of only two states that taxes Girl Scout cookies. How could a heartless legislature turn its back on a tax relief request from this very worthy organization? And how could they deny a tax exemption on goods purchased by homeless shelters?
In 1988, the Governor's Tax Study Committee expressed its concern about the growth of exemptions whether they were serving a public interest or just providing “favors to various special interest groups”. In 2003, that “concern” was again addressed by a legislative task force that scrutinized exemptions. Despite the optimism expressed in several editorials around the state, substantive action did not follow. Though there seemed to be significant support for reform, there was little appetite for taking on entrenched interests who benefited from the tax breaks.
Fast forward to 2013. Both sales tax exemption bills were strongly endorsed in the House committee and easily passed on the House floor. Even with opposition from some members of Senate leadership, it was widely believed that at least the Girl Scout cookies bill would pass on the floor of the Senate and become law. But both bills died without even a Senate hearing.
In a few months we'll have another legislative session and no doubt the Girl Scouts will be back. Will the cookie crumble in the Senate – in an election year? Maybe. But how long can some Senate leaders assert their opposition to what seems to be reasonable bills? Virtually every legislative session in modern memory has considered one or more bills granting sales tax exemptions, so how can lawmakers deny exemptions to the Girl Scouts and to homeless shelters when the law is riddled with tax breaks to possibly less worthy organizations but ones who have far more political muscle? They may be coming late to the party, but the senators position is that until the sales tax is reformed or a well developed criteria for exemptions is established, more exemptions should not be granted.
Enacted in the 1960s, the sales tax is outdated. It was designed for a manufacturing based economy, not the service based economy we have today. Extending the sales tax to services has been a much debated policy option for about 30 years, but to enact an extension to services would involve a tax increase for many current tax-break beneficiaries. Tax reform bills are often supported in concept but shredded beyond recognition in the messy process of lawmaking. (more…)