Tax hikes on the horizon

Utah lawmakers may be vulnerable to several criticisms, but the way they manage the state's finances is not one of them. Although we haven't always agreed with their funding or cutting priorities, they have managed to steer the state successfully through the troubled waters of the current recession, all the while maintaining the state's triple-A bond rating.

Now they face a $700 million budget shortfall — which is real money for a state this size. Some prominent lawmakers, including those in leadership, are talking about raising taxes as part of a mix of cuts and the use of surplus "rainy day" funds. But the taxes they would raise seem likely to be the so-called "sin" taxes — on cigarettes and alcohol.

Frankly, such a move sounds not only inevitable but like a good second step in hard times.

The first step came last year when lawmakers made several cuts but steadfastly refused either to raise taxes or raid the rainy-day funds. We took issue with that. Rainy-day funds are surpluses gained from taxing people more than the state needs to operate in a year. Using them in hard times seemed not only logical but the responsible thing to do. Cigarette taxes in Utah, meanwhile, are far below the national average. Raising them would be responsible, as well, because of the huge costs cigarettes heap on society.

But then the federal government came along with stimulus money, and the state ended up OK.

There isn't likely to be any federal help this year. Yet because of its prudence, the state still has its rainy-day funds and it has yet to raise cigarette taxes. Alcohol taxes present a bit of a more difficult case, as they could lead to a rise in overall restaurant prices and a subsequent drop in business. But they ought to be considered, as well. The time for a massive cigarette-tax hike has clearly come, however. We would recommend one much higher than the increase from 69.5 cents per pack to $1.31.

This second step in dealing with a difficult recession would still hold the line on taxes that directly impact all Utahns. Hiking general taxes — income, sales or property — would impede economic recovery and take money out of the pockets of all Utahns at a time when just the opposite should take place.

We would include gas taxes on that undesirable list, too. According to some arguments, these are discretionary, and they come close to being purely user fees, as drivers use and wear out the roads these taxes fund. But in reality owning and driving a car is mandatory for the vast majority of Utahns. Such a tax hike would hurt everyone, even as it raises prices on all transported goods.

These general tax hikes belong to a third step in dealing with a stubborn recession — a step that ought to be avoided at all costs.