Kentucky Tax Panel Suggests Changes to State Tax Code

The Kentucky Blue Ribbon Commission on Tax Reform presented their report to Governor Steve Beshear (D) yesterday. They voted to approve more than 50 changes to the current tax code, including changes to individual income tax, corporate income tax, and sales and excise taxes.

Governor Beshear thanked the commission for their recommendations, noting the hard work they did "to make our tax code fairer, simpler and more responsive to the needs of a 21st century economy." Lieutenant Governor Jerry Abramson, who chaired the committee, said changes the proposed changes to the tax code "would generate roughly $659 million in new revenue annually once fully implemented."

Proposed Changes to Sales Tax
Proposed changes to sales and excise taxes include:

• Increase cigarette tax to $1.00;
• Increase tax on other tobacco products;
• Restore the tax on cigarette rolling papers;
• Impose a 1% gross receipts tax to utilities (residential and business);
• Impose sales tax to some pre-written computer software;
• Increase tax collection on out-of-state and Internet sales;
• Support federal legislation allowing states to collect sales tax on remote sales.
• Apply sales tax and transient room taxes to full price of hotel accommodation.
• Broaden the sales tax to include selected services, such as: household items, luxury items, services with a clear nexus to Kentucky, services with an "inelastic demand," and services tied to physical products that are already taxed;
• Repeal the distilled spirits case sales tax;
• Exempt mail charges for direct mail from sales tax; and
• Exempt the sales and use tax on "certain equine products."

The Tax Reform Commission Final Report can be viewed in entirety here.

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