Our View: Taxation by word play

Unfortunately, Sacramento is populated by people who already have spent the state into a $17 billion hole for the coming year, so color us a little worried by the latest news.

Orange County Register Sacramento reporter Brian Joseph reported Monday that an obscure rulemaking provision could be used to impose billions of dollars in new taxes on Californians, circumventing the two-thirds constitutional requirement for approval.

A little-known section of the government code allows "any interested person" to petition an agency to request the "adoption, amendment or repeal of a regulation." This strikes us as a convenient way for legislators to raid your wallet and let someone else take the blame.

Amending the regulation that defines what is subject to state sales tax already has been suggested by Board of Equalization Chairwoman Judy Chu, who proposed a new 5 percent tax on services. Current law limits sales tax to goods, such as automobiles and computers. Chu would extend the tax to services, such as dry cleaning and movie tickets.

The temptation is the $8 billion more a year such a scheme could raise. But new taxes are supposed to be passed by two-thirds vote of the Legislature, not imposed by duplicitous word-play, then approved by a mere three votes of the five-member Board of Equalization.

This might sound far-fetched were it not for dead serious proposals already voiced for side-stepping the two-thirds requirement by redefining what's taxable. Already, a tax professor at the New America Foundation and an official with the California Tax Reform Association have called for taxing services. Couple them with Chu's suggestion to impose taxes on services to "modernize our sales tax base," and we think there's a chance of circumventing the spirit and the letter of the requirement for two-thirds approval of new taxes.