Issue date: 11/16/07 Section: News and Opinion

The Iowa state government recently gave their citizens quite a surprise this year when they decided to revise their state Revenue Department's policy on sales tax exemptions. In their infinite wisdom (and undoubtedly for the public welfare), the Revenue Department concluded that pumpkins, which for years have been exempt from the state sales tax because they were considered an "edible squash," are now used primarily by consumers for "decoration" and not "human consumption" and are subject to the 6% state sales tax. Thus, if pumpkins are advertised for use as household decorations or jack-o-lanterns, they're subject to the tax.

While the Revenue Department claims that they were just trying to bring the tax code in line with modern use, what they were really trying to do is steal more money from working people to fill the state's coffers. With Halloween, Thanksgiving, and the major holiday seasons approaching, the tax men in Iowa knew they would make an effortless revenue increase by simply revising policy.

But fear not gentle shoppers, you can still get your tax exemption if you plan to eat a pumpkin instead of carve it. Simply request from the Iowa Revenue Department a form called the Iowa Sales Tax Exemption Certificate, complete it appropriately and swear under penalty of perjury that they plan to eat your fruit.

But this isn't just about making more money for the Iowa government to squander, it's about consumer freedom to buy, consume, and dispose of goods and services in any manner they please without explaining to anyone what they plan to do with it, when, or why. Imagine if retailers asked you what you intended to do with a mattress when you buy it. If you answer "sleep on it" then you get taxed just as if you bought a Cuisinart. But if you answer that you plan to mount wheels on it and tape a flashlight to the front and use it as a trolley, you get to save the money on taxes - what kind of sense would that make and how many mattresses would ostensibly be bought for sleeping? A poor example, to be sure, since mattresses cost a lot more than pumpkins and the tax differential is significant, but the principle is the same and the ideal answer to such a question is "none of your business" and that's exactly what the answer should always be anytime the government, a retailer, or anyone else asks you a question about your purchases when your answer can potentially affect your welfare.

The other half of the story is the effect such a tax has on the pumpkin growers of Iowa. By effectively taxing all pumpkins sold an additional 6%, the state of Iowa has effectively reduced the incomes of Iowa pumpkin farmers and sellers by 6% who will now have to pay the taxes out of their profits. How people do they expect to fill out a simple form for an item that costs a few dollars?

Continued...

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