Norquist: McDonnell's ABC plan does not raise taxes
Gov. Bob McDonnell's proposal to privatize state-run liquor stores would not raise taxes, declared perhaps the nation's best known anti-taxer today.
In a letter sent to members of the Virginia General Assembly today Grover Norquist, president of Americans for Tax Reform, analyzed the taxes and fees McDonnell has suggested be imposed on liquor in a private system and declared that McDonnell's plan does not contain a net tax increase.
Norquist said legislators who have signed pledges not to raise taxes could vote for McDonnell's proposal without violating their promises.
Some Republicans have said they feared the plan might look like a tax hike to the public, particularly because of a 2.5 percent fee that would be imposed on restaurants that chose to buy liquor from wholesalers in a new system.
(Del. Brenda Pogge, for instance, has said she believes it would be a "hard sell" to convince the public that the plan does not contain new taxes. "We recognize taxes when we see them," she said on the day the plan was unveiled.)
McDonnell (R) has countered with the same argument endorsed by Norquist today: His plan, as a whole, raises no more money for the state than the current state monopoly and, thus, does not raise taxes.
For McDonnell, the tax issue has been a tricky one. Many Democrats and some Republicans have said they oppose the plan because it does not fully replace the revenue now brought in to the state's general fund by Virginia's liquor monopoly. McDonnell estimates that his plan will raise about $20 million less in fiscal 2011 than would the current system.
If McDonnell looks to close that $20 million gap by boosting the taxes in his proposal, he'll upset legislators such as Pogge who don't want to vote for a plan that imposes high excise taxes and license fees on the businesses entering Virginia's new spirits market. But if he tries to shore up support with conservatives by trimming the taxes in his plan, it will make the state less money and he'll probably lose other votes.
The Norquist nod should help with the conservative base.
Norquist, who writes in the letter that he supports privatization and believes it would be a "victory for free enterprise," still says McDonnell's plan has "room for improvement."
He calls McDonnell's proposed $17.50 per gallon excise tax "onerous," noting that that rate would be higher than the national average and the highest in the region.
| September 27, 2010; 4:32 PM ET
Categories: Liquor privatization, Robert F. McDonnell, Rosalind Helderman
Save & Share: Previous: Cuccinelli to campaign with candidates in Alabama -- and Iowa
Next: Look who's not coming to breakfast: Defense Secretary Gates
Posted by: kinsman_bob | September 27, 2010 4:54 PM | Report abuse
Posted by: mikethompson1 | September 28, 2010 10:14 PM | Report abuse
Posted by: nwcmbrg57 | September 28, 2010 10:54 PM | Report abuse