Losing out to other states

States do not operate in a vacuum. Like it or not, whatever regulations, taxes or fees a legislature passes will wind up in competition with all the other regulations, taxes and fees in the other 49 states.

Businesses relocate based on tax rates. So do people.

And, apparently, the owners of expensive motor homes and houseboats are savvy enough to shop around as well.

As this newspaper reported earlier this week, experts say as many as 60 percent of the people who own expensive motor homes and boats in Utah are registering them in another state just to save money. Members of the Utah Legislature's Revenue and Taxation Interim Study Committee heard a report that estimates the state is losing hundreds of thousands of dollars each year because of this.

This is an important lesson. Apparently, raising money isn't always as easy as simply raising a tax or fee. If states want to raise cigarette taxes to deter smoking, they run the risk that people will begin buying cigarettes over the Internet from states or countries where a pack is much cheaper. The same holds for prescription medicines and virtually any other product. Today, more than ever before, consumers are savvy and resourceful (if perhaps not always careful).

The idea of registering a vehicle in another state isn't new. Nearly 20 years ago, this newspaper was reporting on the number of Utahns who were registering their cars in Oregon despite residing here. That had to do with Oregon's lax residency laws and its low registration fees. But such a thing was illegal in Utah. People who live here are expected to register their vehicles here.

The motor home and boat phenomenon is different. People are setting up limited partnerships in other states, then declaring the motor home or boat as that partnership's asset. That process costs money, but not nearly as much as Utah's registration and property tax fees. It also happens to be legal.

Utah has a couple of choices here. It could begin charging a flat fee to register these vehicles, based on the age and size of the item rather than its market value. The state already did this with automobiles and light trucks. That would cost much less and reduce the incentive to shop elsewhere.

Or it could deliberately set a fee slightly lower than what Montana, Oregon, Wyoming and other nearby states charge. Maybe then, people in those states would begin registering their vehicles here, and the state could recoup some of its losses in sheer volume.

Either option is likely to bring in more money, and be better for local dealers, than the current system.