A FAIR TAX? CHAMBER, CITY STUDY POSSIBILITIES

A fair tax. Congress has debated a fairer system of taxation for years, with mixed success. But tax concerns are not limited to the national or state levels. The Cape Girardeau Chamber of Commerce is surveying local businesses about the current merchant-license system. Survey results may be used to promote what the chamber officials feel are long overdue changes.

The survey seems a sensible way to assess local attitudes about the merchants tax. Since businesses are paying the tax, it seems only fair to consider their input.

At the heart of the fairness issue is the fact some merchants pay a flat fee, while others are taxed $1 for each $1,000 in gross receipts. The latter taxation has no cap. In 1989, 445 businesses (31 percent) paid the flat fee, while 960 businesses (69 percent) paid the gross receipts tax. The bottom line is that only 2 percent of the 1,252 licensed merchants pay 34 percent of the collected taxes.

The current tax dates back to 1936, and covers such outmoded businesses as blacksmiths, corn doctors, and feather renovators. While businesses and prices have changed dramatically since then, the tax language has remained the same. Auto dealers have been particularly hard hit as the price of cars was $400 in 1936, and is generally more than $15,000 today.

The law itself also contains a lot of confusion over which tax a business is required to pay. One of the major concerns centers on the lack of a limit on the amount of tax paid.

In reviewing the options, both small and large businesses should closely consider the consequences. The city can't afford to eliminate the tax without implementing an alternative. It generated $491,000 last year, with about $38,000 of the tax paid under protest.

And if the largest taxpayers pay less, that means someone will have to pay more. That's why the alternative has to be palatable to all businesses - not just the largest taxpayers.

Three alternatives are being examined as part of the study: a net earnings tax; a payroll tax on total wages of each business; and a business tax of $1 for every $1,000 in gross earnings, with a rollback provision after the first year. The rollback provision would insure against a windfall for the city.

Unlike congressional studies, the point of this tax review is not to generate more income, it's to find a fairer system of taxation. Tax reform without tax increase? It's an idea whose time has come. When all is said and done, Congress and the Missouri General Assembly may be able to take a tax lesson from Cape Girardeau.