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Leadership vacuum leads to anti-tax initiative

It’s almost a foregone conclusion that Initiative Petition 37, which seeks to ban taxes on sales of groceries, will go before Oregon voters this November. Supporters have submitted well more than the 117,578 signatures needed to qualify the proposed constitutional amendment to the ballot. The deadline to pull the petition has passed. And the machinery both for and against the proposal is already cranking up, as OPB’s Dirk VanderHart reported. The campaign, funded by national retailers, is rolling out videos touting the need to “keep our groceries tax free” while Our Oregon, the political arm of public-employee unions, is prepping its counter arguments.

Feel familiar? Just two years ago, voters endured a knock-down, drag-out fight between businesses and public-employee unions over the union-backed Measure 97, which sought to impose a 2.5 percent gross-receipts tax on corporations with more than $25 million in annual Oregon sales. Despite its touted aim of propping up education and health care, the proposed tax was a blunt instrument that would have hit hard businesses and consumers alike, potentially adding costs onto necessities like milk and vegetables multiple times before they even reached store shelves. Oregonians resoundingly defeated it after the most expensive ballot-measure campaign in Oregon history.

Now, Oregon seems headed toward a sequel. Only this time, it’s corporations pushing the initiative, armed with an unassailable message: Groceries should remain tax free. But while Oregonians need to hear more about the proposal, the initiative petition poses some of the same concerns as Measure 97. As the campaign heats up, Oregonians should evaluate the claims, consider the possible consequences and question the backers with the same thoughtful skepticism that they showed with Measure 97 two years ago.

To be sure, Oregonians shouldn’t even be in this situation in the first place. This brawl over tax revenue stems directly from the lack of leadership by Gov. Kate Brown, Sen. Peter Courtney and House Speaker Tina Kotek in addressing the glaring dysfunction in Oregon’s spending and revenue systems. Oregon just got out of one budgetary crisis and is looking at additional crises for the next few biennia, as spending, driven by pension and health care costs, far outpaces the state’s record revenue growth. Yet even with that fiscal reality staring them in the face, the three decided that serious reform could wait until 2019.

So instead of leadership, Oregonians are getting a free-for-all. Businesses, unions and others nervous about protecting their interests instead are appealing directly to voters, trying to persuade Oregonians that it’s in their interest to take their ideas and vote them into law.

That might make sense in some instances where the goal is narrowly defined and the mechanics of achieving it are uncomplicated. But tax policy is not that. As Measure 97 showed, the one-size-fits all corporate-tax approach detailed in that ballot measure provided no consideration for the razor-thin profit margins of a grocery retailer, the multi-layered complexity of a supply chain or the constraints of a commodity-based business. Sound tax policy requires an attention to detail that a ballot measure designed around a catchy slogan simply cannot provide.

IP 37 doesn’t seek to impose a new tax, and backers contend that their proposal is specifically tailored to a narrow set of establishments — grocery stores, farmers markets, convenience stores, food banks and other such outlets that treat food as necessities, said campaign spokesman Dan Floyd. But it still affects tax policy by declaring one element completely off the table. Oregonians should weigh whether it makes sense for voters to jump into the morass of tax law at all, much less issue such a blanket ban.

That’s especially worrisome considering that the proposed ban on taxing groceries could play out in unintended ways. As VanderHart reported, there’s already disagreement between the state justice department and the backers about whether the law would include restaurants. The state says it would, while backers disagree. Opponents, not surprisingly, raise other questions of how broadly the law could apply, and their potential to affect other revenue streams that the state relies on. Oregonians need to hear concrete responses before committing to a constitutional amendment that could only tie elected leaders’ hands in addressing the fiscal crisis.

That is, assuming that someone in elected office will address the crisis. Which leads to one more question voters should seek to answer for themselves. As they learn more about the proposal, Oregonians should press Brown and her Republican challenger, Rep. Knute Buehler, to weigh in — both on the proposal and on the larger question of how to solve Oregon’s recurring fiscal crisis. Because if the current trend of putting off fixes continues, Oregonians will only be seeing more and more of these efforts to legislate fiscal solutions by popular vote.

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