Oregon's lack of a sales tax... and Wal-Mart.

Over at his blog called Technically, A Blog, Jason Skelton is thinking about our lack of a sales tax - and how it means that local leaders can't use sales-tax waivers to attract big-box retailers like Wal-Mart.

Oregon's lack of a sales tax may be a factor in Portland's ability to encourage ownership of locally owned businesses and avoid being overrun by big box retailers. Tax Increment Financing ("TIF") through a sales tax makes it easier for government to give away public assets, especially to baddies like Wal-Mart.

In short, a municipality desperate for economic development allows a large retailer to keep the sales tax it collects because the municipality hopes that the economic benefit to the community will outweigh the tax revenues it is giving away. This hope is probably misplaced. ...

It is worth noting that TIF can involve income, property or other types of taxes. The key difference with a sales tax, though, is the "free money" aspect: government leaders are likely to view all the sales tax revenue from the new retailer as coming wholly from the new business generated when it is likely that the bulk of the sales tax revenue would have occurred from the current businesses in that sector. In other words, the Wal-Mart or Home Depot is cannibalizing the locally owned businesses.

Read the rest. Discuss over there.

Feb. 06, 2008 Posted in elsewhere.