I’ve got mixed emotions about the variable rooms and meals tax (R&M). On one hand it is the microcosm of federalism. Every town would be the master of its own demise. Durham would be like New York State, Keene might be like Michigan. On the other, starting at 9% is way too high to begin with, raising taxes always means more government—which we simply do not need–and there is also the matter of the resulting confusion from having dozens of different rooms and meals taxes all over the state. But like the story of the father who locked his son in a closet and made him smoke an entire box of cigars—to make him hate them enough to never smoke them again—sometimes hard lessons are the only ones learned.
So let’s forget the confusion issue for the moment and accept that we have to have an R&M tax. In that situation what if the state portion or the starting point was a much lower 2 or 3% instead of 9% with whatever protections you could manage to keep the state from raising the base rate for as long as possible. (Not going to happen, which is why this actually a really bad idea, but lets play along). Towns would then be free to set their own rates based on their proclivities with some striving to keep the rate much lower than the current 9% and others…well, when you cram more of the incompetence of government down to the town level all kinds of fun things become immediately apparent.
A Rooms and Meals Tax is viewed as easy money. Town councils or selectman looking for a way to offset the pressure of local unions that want a raise every year and liberals who love to spend and grow well beyond the ability of others to pay, could and would want to fall back on the R&M to balance their taste for excess without increasing property taxes.
A liberal with an open ended tax is like a sex addict in a whore house. They soon find themselves with no money—in this case your money—and out on the street.
Towns with higher R&M’s would immediately become less attractive to existing business and employers and scare off any new ones as patrons of these businesses drive an extra five feet to save a few bucks. This eventually puts tax pressure on everyone else to cover the lost revenues. A tax revolt ensues at the town level, all the tax and spenders are replaced with people who respect other peoples right to their own money, and someone finds a way to balance the town’s actual needs with revenue.
Is it an expensive lesson? Of course it is, and we would forever be left wondering when the big spenders in Concord would come for more, but the hardest lessons are the ones that are remembered. And if that’s what it takes to get more people off their sofa’s and interested in what their local governments are wasting their earnings on, then maybe we shoul play ball.
On a more realistic note, that’s not how this will play out. As much as the federalism idea appeals, towns will continue to see more costs crammed down as a result of Concord’s incompetence. This will force towns to raise the R&M even more to deal with a succession of new "bad decisions" at the state level. It will then also serve as an excuse to raise taxes at the state level to "protect the towns" from raising their own even further. So you just can’t win. No matter how you look at it you get screwed by the State.
And none of this gets better until we accept that democrats added 25% to the size of state government during a recession and the only way they can see to offset that stupidity is to shift costs to towns. Giving them an excuse to collect extortion money for the states addiction is not a gift, it’s a curse. And the only cure is fewer tax and spenders in Concord, which means fewer democrats and their RINO accomplices.
Cross Posted at NH Insider