Published 12:00 am Saturday, February 12, 2005

The deficit is huge…and it’s growing.

While local county governments are finding themselves in deeper in debt, year-after-year, thanks to skyrocketing Medicaid costs, what could prove as a life raft in an endless sea of financial hardships is like a mirage – a mirror of hope that’s just beyond reach.

In his column in the January issue of CountyLines, Breeden Blackwell, president of the North Carolina County Commissioners Association, addressed an issue that seemingly isn’t going away.

Blackwell, a member of the Cumberland County Board of Commissioners, based his column on the revenue losses suffered by state and local governments from untaxed Internet sales. He claims those losses were $680 million during the 2002-03 fiscal year. They are projected to top $1 billion next year.

One billion dollars in lost revenue. Alone, that far exceeds the $450 million the state expects to spend on Medicaid during 2005-06. Divide the remaining $550 million among the state’s 100 counties for public education and, I don’t know about you, but I’d love to see what kind of educational upgrades the Central Office folks in Bertie, Hertford and Northampton counties could do with an extra $5.5 million each to spend.

But the question remains – will politics stand in the way of making this dream come true? Or will the state continue to pursue a pipe dream of balancing the budget on the back on &uot;sin taxes&uot; – proposed hikes in what the ordinary Joe pays to smoke a cigarette, take a sip of beer or fix themselves a mixed drink.

No one is opposing the convenience of sitting at home in your underwear and shopping online. It’s a great way to shop without the hassle of making a trip to the retail outlets, dealing with uninformed, and often uneducated, sales clerks, waiting in a long checkout line and then having to lug all that stuff to your car – the one squeezed in a tight spot between two Hummers, all parked in Section Z, row ZZ.

Most major retailers have made shopping online as easy as a ‘Carolina coed. Browse through the user-friendly pages of deals; read all the specs on the product you’re shopping for and get an idea of just how good the product is by checking out the customer surveys.

Yes, online shopping is here to stay, but why aren’t those folks subject to the same taxes a shopper pays during a live visit to a retail outlet? What’s fair for one is fair for the other. They’re both seeking the same product, but choosing different ways to make those purchases.

The fact that the government is shying away from collecting these fair taxes boggles my mind. Who is sleeping with whom here? Yet, at the same time, they drool over ways to hike taxes for those who choose to smoke and drink.

Their logic is flawed when they assess how much money will roll into the state’s coffers (and eventually trickle down to the county level) upon raising the &uot;sin taxes.&uot;

In a January column that appeared in this publication, John Hood of the John Locke Foundation said state legislators want to raise the cigarette tax by as much as 75 cents per pack. That, he said, would add a half-billion dollars to state revenue. State lawmakers are pointing to the fact that since smoking is associated with deadly and debilitating illnesses, the tax increase will essentially pay for itself by heading off costs to Medicaid.

However a study has shown that hiking the cigarette tax by 75 cents would only reduce smoking by 17 percent. So, in essence, for the state plan to raise $500 million on the backs of those who like to light-up, then the vast majority of smokers must stick to their habit. Where’s the health benefit to that logic? How does that lessen the burden that smokers will place on Medicaid in the years to come?

Hood summed up the whole deal by making this simple statement – &uot;First, North Carolina doesn’t have state deficits because its citizens are undertaxed. The problem is that politicians have promised voters more of other people’s money, directly or indirectly, than there are ‘other people’ willing to be subjected to additional pilferage. Thus long-term spending promises exceed reasonable long-term revenue projects. A half-billion-dollar influx of new cash in 2005 will enlarge the politicians’ appetite for new signature programs and endless meddling, the costs of which will soon enough exceed the revenue enhancement.&uot;

If the government decides to hike the sin taxes and then votes against collecting sales tax for online sales, then perhaps I’ll start buying my Winstons through the Internet.