No on Prop. G: Local economy can’t afford tax increase 

There has not been too much positive economic news in San Francisco or America during recent years as we continue to stagger from the aftershocks of the Great Recession.

The City’s unemployment rate continues to hover around 9 percent, double the rate at the start of the recession three years ago. More than 40,000 San Franciscans are unemployed due to stagnant job creation. Housing prices remain flat as everyday expenses such as gas, food and city fees increase.

But San Franciscans received an economic booster shot in July, when the temporary 1 percent California sales tax expired. The City’s sales tax rate dropped from 9.5 percent to 8.5 percent. As a result, an additional $120 million per year is currently pumping into the local economy that otherwise would have been claimed by Sacramento.

Unfortunately, city officials have placed a half-cent sales tax hike on the November ballot that could cripple the economic recovery before it gets started. Proposition G would take about $60 million per year out of the local economy. That totals more than $700 million over the next 10 years that would have gone to local businesses or remained in consumer pockets, but which would instead be sucked into the ravenous, wasteful maw of government.

Half of the tax increase is slated for public safety and the other half to help children and seniors. Those are laudable goals. But the problem is that nothing prevents city officials from reducing existing funding for public safety, children and seniors, and spending it elsewhere.

While city bureaucrats and politicians proclaim the extra tax is needed to close a proposed $350 million deficit for next fiscal year and argue that the increase only brings the sales tax back to its previous level, they should be reminded that  the small amount of fiscal relief we are experiencing is mere pennies compared to the increases we have accepted for Muni, parking tickets and park and recreation fees while experiencing reductions in services.

The best way to increase city tax revenue is to grow the city economy. More companies making more sales and hiring more employees who earn more money leads to more taxes for more programs for public safety, children and seniors.

The other problem with Prop. G is that it allows The City’s half-cent sales tax hike to remain in effect even if the state increases its sales tax rate by 0.75 percent or more beginning in 2016. It would leave a fiscal sword of Damocles hanging over San Franciscans’ heads that could result in a sales tax of 10 percent or more in The City starting in 2016.

But even without that threat, approving Prop. G would place San Francisco at a competitive disadvantage by having one of the highest sales tax rates in the Bay Area. Someone thinking of a big-ticket purchase may think twice before doing so in The City.

Raising taxes is never a strong economic move, but it can prove disastrous in a weak economy, especially when some experts are warning of a possible second recession in the coming year. Voting no on Proposition G may be the single best thing San Francisco residents can do for themselves and their city.

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