Disaffected Taxpayers Oppose Higher Levies, Urge Budget Pruning

CONSERVATIVE activist Alan Keyes is planning a march on Washington this fall. Strongly opposed to President Bush's proposed tax increase, Mr. Keyes is rallying other like-minded opponents, mostly business groups, to carry their message to the White House and Capitol Hill. ``Anybody who says a tax increase is necessary is lying,'' says Keyes, a former Reagan official who is president of the 350,000-member Citizens Against Government Waste. He argues the way to cut the United States deficit is to eliminate $305 billion in government costs - from uncollected delinquent taxes to overstocked inventory. ``The president should be ashamed of himself for breaking his pledge,'' he says.

Keyes is one of many disaffected taxpayers who feel their interests will be compromised with increased taxation. The common thread running through arguments against added levies on gasoline, alcohol, cigarettes, and income is that the money can and should come from elsewhere - including reduced government spending on Medicare, employee benefits, and defense.

Objections to gas tax hike

The prospect for an increased federal gasoline tax, now nine cents a gallon, has raised the ire of the Highway User Federation, whose members include US oil companies, automakers and related industries, manufacturers, and distributors.

One member is the American Petroleum Institute, whose spokesman William Taylor says a higher gas tax would result in a disproportionate tax burden, specifically for rural and lower-income consumers.

``People in rural areas drive longer distances, so their consumption is higher; and areas without mass transportation also result in higher gasoline use. Second, lower- and middle-income groups spend a greater percentage of their income on transportation, so there are regional and individual disparities,'' Mr. Taylor says.

Taylor foresees a wide-ranging economic impact of higher gasoline taxes. ``The popular theory is that each penny increase will produce $1 billion in income. That's not true.'' Decreased consumption will result as taxes increase, he says, and revenues will fall.

The tobacco industry is lobbying against increases on cigarette taxes, claiming that it will fall unevenly on the poor, who are the majority of smokers. By naming the poor as the tax victim, the tobacco and alcohol producers have formed an alliance, says Action Against Smoking (ASH) president John Banzhaf. The high costs of smoking

The health benefits of discouraging smoking and economic benefits of collecting more revenues could make a difference in the deficit that is not readily apparent, Mr. Banzhaf says. ``The fourth biggest item in the federal budget is health care - principally Medicaid. As much as 25 percent of all health-care costs are related to smoking.''

The federal, state, and local cigarette excise taxes total less than $10 billion annually, says Banzhaf, while the total annual cost of smoking-induced health problems is more than $100 billion. ``Put it this way,'' he says, ``every time a pack of cigarettes is sold, the government subsidizes it by an additional $3.''

Budget savings and tax increases are now inescapable issues in the 1990 congressional campaign. A growing number of conservative Republican candidates have distanced themselves from Bush's position on taxes.

Keyes understands why. He refers to a recent Wirthlin poll that found ``64 percent of the respondents preferred cutting waste to any other deficit reduction alternative. Only 2 percent said raise taxes.''

Budget talks pending

Just how successful Keyes and others are fighting tax increases will be measured in the coming months of budget negotiations.

The looming question is whether or not Congress and the administration will address the revenue side of the deficit in an election year.

Norman Ornstein of the American Enterprise Institute says that regardless of the timing, tax hikes are inevitable. Cigarettes and alcohol and other excise taxes are the first order, Mr. Ornstein says, with an environmental-pollution tax and an energy tax probable. Higher income taxes will involve tougher consideration, he says.

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