| Don't tax the lottery Gov. Mark Sanford is on the right track in seeking to lower the state income tax as a way to boost South Carolina's economy - which is certainly in need of boosting. It is one of the few states where the unemployment rate is still rising, despite an improving economy. Specifically, the governor proposes to cut the income tax from 7 percent to 5.9 percent and offset the lost revenues with a cigarette and lottery tax package designed to raise more than $220 million. As a rule, we don't think it's a good idea to replace one tax with another - it's too much like a shell game. But this is the exception that proves the rule. Cigarette taxes, be they high or low, have a negligible impact on the job market. That's not true of income taxes; the lower they are, the better it is for the economy - and jobs. Moreover, phasing out the income tax was a key component of Sanford's election campaign last year. If he didn't make the effort, he'd be breaking faith with the voters. That said, it must also be noted the governor's plan to levy a 5-cent tax on lottery ticket sales is a terrible idea. It not only would fail to raise the revenues he hopes for, it could actually destroy the lottery, thus losing revenues for education that he's now receiving. The lottery, which last year raked in nearly $727 million for South Carolina coffers, is a tax in itself, albeit voluntary, when one buys the ticket. The winnings are also taxed. Adding a 5-cent tax to the ticket purchase is a tax on a tax on a tax. Ridiculous. This is why, according to lottery experts and administrators this newspaper talked to, no other state taxes lottery tickets. If they did, ticket sales would almost certainly plummet and revenues tumble, especially since the hugely popular multi-state Powerball game, of which the Palmetto State is a part, prohibits adding any tax to its $1 tickets. If Sanford succeeds in getting his 5-cent lottery levy, he'll lose more revenues than he'll gain - and that will only cripple his plan to lower the state income tax and boost the economy. He can, and must, do better.
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