STUDY FORSEES ADJUSTMENTS IN TAXATION

At the same time there is so much news of overflowing state revenue coffers, along comes a study looking years down the road and warning of changes to come. The survey on the future of state and local revenue sources was done by the National Governors Association, the National Conference of State Legislatures and the National League of Cities. What it showed is that changes in the economy will need to be matched by changes in tax policy in order to raise enough revenue to fund state and local government.

The main point at issue here is that the economy is continuing its decades-long shift from the manufacture of tangible goods to one increasingly dominated by a wide range of services. In 1959, services constituted less than 40 percent of Missouri's gross domestic product, while goods production constituted roughly half. By 1994, services were almost 63 percent of total gross product, while goods production dropped to 37 percent. Also mentioned is the rise of Internet commerce, with its largely untaxed transactions. This new form of commerce will explode to an estimated $1.3 trillion by 2002, according to the survey.

All this means that a tax system designed to deal with the manufacturing of tangible goods will need major adjustments over the next decade. In this regard, it is good to see certain visionary leaders beginning to talk about wholesale replacement of the much-hated property tax. This an many other issues will come into play in this debate, as we seek a fair and equitable scheme of taxation that raises sufficient revenue for the legitimate functions of government.