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Oklahomans to vote on state sales tax increase

  • Jul 30, 2016 | Gail Cole

 Should Oklahoma's state sales tax rate increase?

Updated 11.11.2016: Oklahoma voters rejected the proposed state sales tax hike on November 8.

Like many states, Oklahoma needs more revenue. To secure it, Governor Mary Fallin has proposed modernizing sales tax by improving audits, eliminating many exemptions, and broadening sales and use tax. However, she opposes an idea championed by former governor David Boren: increasing the state sales tax rate.

The idea is embraced by many and has its share of detractors, some of whom challenged the constitutionality of a ballot proposal that included the 1% increase to the state sales and use tax rate. At the start of 2016, The Oklahoma Supreme Court determined that Initiative Petition No. 403 “did not violate… the Oklahoma Constitution and … [was] legally sufficient to submit to the voters of this state.”

Then in April, after a sufficient number of signatures had been gathered to place the initiative on the ballot, the Attorney General “concluded the proposed ballot title did not comply with applicable laws for the following reasons:

  • It fails to explain that the one cent sales and use tax contemplated by the measure will be in addition to the state sales and use tax already levied by the Oklahoma Sales and Use Tax Codes.
  • It suggests that allocated funds will, in part, be used to improve college affordability, when the measure indicates that the funds may be used for college affordability or for otherwise improving higher education. That is, funds may be allocated in whole, in part, or not at all for college affordability.
  • It fails to explain that the increase in teacher salaries as funded by Section 3(A) (l) (b), and as requited by Section 4 of the new Article, requires that teacher salaries be raised by at least $5,000 more than the salaries paid in the year prior to adoption.
  • And, finally, it inaccurately states that it prohibits school districts' use of funds for increasing administrative salaries, when the measure is more limited in that it only prohibits an increase in superintendents' salaries and the addition of superintendent positions.”

The Attorney General subsequently submitted a new title for the ballot initiative that included the four points above.

The Supreme Court rejected the Attorney General’s proposed title on the basis that it was too long but agreed that the original title was misleading. It then rewrote the ballot title itself, which it is empowered to do. The new title, which will be on the November ballot, reads:

This measure adds a new Article to the Oklahoma Constitution. The article creates a limited purpose fund to increase funding for public education. It increases State sales and use taxes by one cent per dollar to provide revenue for the fund. The revenue to be used for public education shall be allocated: 69.50% for common school districts, 19.25% for the institutions under the authority of the Oklahoma State Regents for Higher Education, 3.25% for the Oklahoma Department of Career and Technology Education, and 8% for the State Department of Education. It requires teacher salary increases funded by this measure raise teacher salaries by at least $5,000 over the salaries paid in the year prior to adoption of this measure. It requires an annual audit of school districts' use of monies. It prohibits school districts' use of these funds for increasing superintendents' salaries or adding superintendent positions. It requires that monies from the fund not supplant or replace other educational funding. If the Oklahoma Board of Equalization determines funding has been replaced, the Legislature may not make any appropriations until the amount of replaced funding is returned to the fund. The article takes effect on July 1 after its passage.

Additional details are available here.

Any change to sales tax rates, state or local, necessitates altering point-of-sale (POS) systems. The most effective and efficient way to handle sales and use tax compliance is to implement an automated solution like Avalara AvaTax. Learn more.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.