Taxes and Revenue

OK. So today the Regional Transportation Authority (RTA) will begin collection of .5% sales taxes on all items and services purchased except food and prescriptions. Housing is part of this tax hike, so tack it onto the price of a home, in addition to interest rate hikes and a housing glut that favors lower prices. Not the best time to invest in housing, it looks like. Buy high and sell higher is what some think is the norm and maybe it is because they aren’t making any more land and they sure are making more people. According to a source, housing prices are down 10-15% here in Tucson, as they are nationwide, particularly in Florida. Somebody is going to lose money!

I guess it makes sense to OK a residential high rise downtown during a water shortage and a housing glut. Cheap housing brings people as long as our quality of life remains sustainable in terms of water and food consumption. True, a high rise residential unit uses less water than lot housing development. I just wish you luck selling those residential units at the level you hoped for when you wrote up your proposal. Tucson no longer has cheap housing and cannot compete for the population overflow from the Midwest and California, as if we need any more.

After that brief detour, I return to the implications of the RTA. What if the sales tax projections fall short of the reality? It’s like divvying up the Colorado River during the rainiest period on record. Take your tax projections from a period of growth and inflationary spending, and the actual revenue could diminish if there is a recession.

The wholesale price of gasoline was up to $2.20 today. Add tax and dealer profits and we’re going to be paying $3.20. So goes Wal-Mart, so goes sales tax revenues? Check the figures and see if consumer spending is being diverted into paying for gas. Discretionary income is unknown to many as you should know, or are you a member of the ‘Let them eat cake’ group? Huge amounts of money are being spent to maintain our cars, agriculture and distribution system.

Given the limitations on resources, we cannot expect inflation to conveniently adjust the price of oil for us again. There is a true shortage coming, not just a production slowdown. Inflation now means impoverishment and Mr. Bernanke of the Federal Reserve is right to focus on controlling it.

So connect our rising taxes and petroleum prices, public debt, the RTA, a housing glut and a high rise downtown. Pull out your wallets and pay up.