CALIFORNIA COMMENTARY : Injustices Steal Revenues : Instead of cutting services, the Legislature could ignore lobbyists and big business and tighten up the tax laws.

The budget battle now playing itself out in Sacramento is both unnecessary and immoral. A reasonable state tax policy could produce as much as $7.85 billion more per year. That would more than make up for the $3.6-billion budget gap.

It is simply outrageous that we allow a situation to develop in which our legislators and Gov. George Deukmejian are even talking about actions that would cut or close in-home supportive services for more than 19,000 elderly and dependent people; mental health clinics affecting 48,000 clients; services for more than 59,000 abused and neglected children; day programs and family support services for more than 13,000 disabled people; enrollment in the state’s university system by 44,000; successful job training and job placement programs; outpatient services for lower-income Californians, and funds to control toxic substances.

The budget deficit can be addressed, without cuts, by correcting many tax injustices that benefit big businesses and people in the upper income-tax bracket. Some examples:

--Tax the net investment income of insurance companies, for a projected revenue of $1.26 billion.

--Raise the rates on high-income taxpayers (single, $110,000 and married, $220,000) to 14.3% from the present 9.3%. This would raise a projected $2.1 billion.

--Raise the alcohol tax to 5 cents per drink. We now pay taxes of less than a cent for beer and wine and less than 2 cents for distilled spirits. The projected revenue gain would be $754 million.

--Reassess non-residential property, for a projected gain of $2.85 billion.

--Add a transfer tax on property valued over $1 million, for a projected $700 million.

--Close the loophole for the sale of business assets, for a projected $100 million.

--Delete the sales-tax exemption for candy. The projection: more than $60 million.

Many of these suggestions have been knocking around the Legislature for quite some time. But in most cases, big business and lobbyists have stepped in to squelch attempts to change the tax law.

For example, insurance companies have successfully kept the Legislature from pushing for a tax increase on an industry that enjoys tax breaks once reserved for charities. The reason is simple--a lot of lobbyists and a lot of campaign contributions.

Another example is the alcohol tax. Why does California pay one of the lowest rates in the nation? The answer again is obvious. Special interests, lobbyists and campaign contributions are keeping Sacramento from taking a much needed step toward correcting the existing tax injustices.

It is time for politicians to quit cutting cost-effective, necessary state services and learn how to use the “T” word. It is also time for each of us, as citizens, to do our part to enact those tax reforms necessary to maintain California’s livability and meet our obligations to our fellow citizens.