The state of state sales tax in 2017
- Sales and Use Tax
- February 9, 2017 | Gail Cole
Last updated 3.6.2017.
In State of the State addresses and budget proposals across the nation, governors are proposing sales and use tax changes. Read on to learn what governors are saying about sales tax in 2017:
Alabama: Governor Robert Bentley (R) pointed out that “Alabama is one of only four states with no tax break on groceries,” and he has proposed the creation of a task force to “study the impact of removing the sales tax on food.”
Alaska: Governor Bill Walker (Independent) did not reference sales tax in his State of the State Address for 2017, but he did say he maintains his support for the revenue bills he introduced last year, which include a state sales tax.
Arkansas: Governor Asa Hutchinson (R) did not reference sales tax in his State of the State Address. However, he has already signed a bill into law that reduces the sales tax rate on syrups and applies the full rate of sales tax to candy and soft drinks (currently taxed at a reduced rate). Specified digital products (digital audio works, audio-visual works, and ebooks) as well as computer software delivered electronically are also to be taxed under House Bill 1162. Additional details are available in the HB 1162 Fiscal Impact Statement. The changes are set to take effect on January 1, 2018.
Colorado: In his annual State of the State Address, Governor John Hickenlooper (R) spoke of Colorado’s leadership in the legalization of recreational marijuana and emphasized the need to use “tax revenue from marijuana sales” to help people who fall through the cracks, such as homeless vets.
Florida: The 2017–2018 Budget Proposal introduced by Governor Rick Scott (R) proposes a one-year sales tax exemption on college textbooks, exempting school book fairs from sales tax, and implementing four sales tax holidays: a 10-day back-to-school sales tax holiday, a nine-day disaster preparedness sales tax holiday, a three-day veteran’s sales tax holiday, and a one-day camping and fishing sales tax holiday. His 2017 State of the State Address only references the exemption for college textbooks.
Illinois: Governor Bruce Rauner (R) did not reference sales tax in his 2017 State of the State Address. However, the Illinois Senate is considering a plan that would reduce the general state sales and use tax rate from 6.25 percent to 5.75 percent and broaden it to apply to several currently exempt services, such as car repairs, cable and satellite, landscaping, and laundry. In addition, the plan would impose the general state rate on food, drugs, and medical supplies, which are currently subject to a reduced rate of 1 percent (Chicago Tribune).
Maine: Governor Paul LePage (R) announced his intent to broaden sales tax in his State of the State 2017. His Budget Proposal seeks to expand sales tax to numerous services, including household services, personal services like haircuts, personal property services like dry cleaning and laundry services, and recreation and amusement services like lift tickets at ski resorts. The budget would also increase the sales tax on lodging from 9 percent to 10 percent and require online lodging rental platforms (think Airbnb) to collect and remit taxes.
Massachusetts: In his second State of the Commonwealth Address, Governor Charlie Baker (R) said, “We’ve proposed closing the tax loophole on Airbnb. But we will oppose any effort to pass a broad-based tax increase on the hardworking people of the Commonwealth.”
Minnesota: Governor Mark Dayton (D) bragged that “no one has raised the state sales tax since 2008, except on tobacco.” That is the only reference to sales tax in Dayton’s 2017 State of the State Address.
Nebraska: In his State of the State Address, Governor Pete Rickets (R) said that “the revenue gap must be addressed without increasing taxes.” He emphasized that increasing sales tax or extending the sales tax to groceries “would harm Nebraska families and be bad for our economy.”
Nevada: Republican Governor Brian Sandoval’s 2017 State of the State Address highlighted his budget’s “one new source of revenue, a 10 percent excise tax on all retail sales of recreational marijuana.”
New Jersey: Governor Chris Christie (R) referenced the recent sales and use tax rate decrease in his 2017 State of the State Address. He also shared the “even better news — it will be cut again on January 1, 2018.”
New York: Governor Andrew Cuomo's (D) FY 2018 Executive Budget Financial Plan requires marketplace providers to collect New York sales tax when it facilitates sales to residents, even if the seller is from out-of-state. The New York Senate opposes this, and has stated that the correct forum to address this issue is Congress.
Ohio: Governor John Kasich (R)’s biennial budget proposal seeks to increase the state sales and use tax rate from 5.75 percent to 6.25 percent. In addition, his proposal would broaden the sales tax base to include many services, including cable subscription, cosmetic surgery (non-medically necessary), landscape design, lobbying, and travel services. However, the budget would eliminate the sales tax on state payments to MHICs (Medicaid health insuring corporations).
Oklahoma: In her 2017 State of the State Address, Governor Mary Fallin (R) called for eliminating the state sales tax on groceries, which she described as “the most regressive tax on the books today.” She also said there is a need to modernize sales tax to reflect the current services-based economy and proposed “expanding the sales tax base.” Finally, she said, “I’m asking you once again to raise our cigarette tax.” Additional details are available in the Fiscal Year 2018 Executive Budget proposal.
South Dakota: Governor Dennis Daugaard (R) spoke of the continued weakness in the state sales tax, which he blamed in part on “the continued growth in online sales” and the fact that “many online retailers do not collect and remit sales tax.” He then shared the news that Amazon would be collecting South Dakota sales tax as of February 1 — “a big step in the right direction.”
Texas: There was no mention of sales tax by Republican Governor Gregg Abbott in his State of the State Address. However, he did share his philosophy on taxes in general: “As far as I’m concerned, the only good tax is a dead tax.”
Utah: Governor Gary Herbert (R) pointed out that the number of sales tax exemptions has nearly doubled since 1996 and urged the Legislature to thoroughly examine each one and consider “whether it has outlived its usefulness.” He also raised the issue of untaxed out-of-state purchases, which have increased due to the “convenience of online shopping.” Although consumers owe use tax on these purchases, he said, the state is failing to collect an estimated $150 to $200 million in use tax revenue annually. He said, “We all know that Congress needs to resolve the issue of how to effectively collect our owed but unpaid use tax. But if Congress won’t do its job, then you, the Legislature, must act to provide our own state solution."
Washington: Democratic Governor Jay Inslee made only one comment about sales tax in his 2017 Inaugural Address. Referring to the state’s need to fully fund K–12 education, he said: “I just don’t think raising property or sales taxes is the best approach to this problem.”
West Virginia: After saying, "I truly from the bottom of my heart hate tax increases," Governor Jim Justice (D) said, "I've got to have everybody in this state pay a half of a penny in additional sales tax. There is no way around it." The new governor is also proposing a 10-cent gas tax increase.
Wisconsin: Although Governor Scott Walker (R) did not mention sales and use tax in his 2017 State of the State Address, last fall he promised to include a “Back to School” sales tax holiday in his 2017–19 biennial budget. See the governor’s press release for additional information.
Wyoming: Governor Matt Mead (R) said, “I support, in concept, the sales tax collection from remote sellers.” He also asked the Legislature to “consider continuing the Manufacturing Tax Exemption, which is sunsetting."
Also in Wyoming: A proposed 2 percent sales and use tax rate increase has been rejected by the House, which then voted down a proposed 0.5 percent sales and use tax increase. An omnibus education bill now under consideration excludes “the last remaining possibility of a sales and use tax increase” (WyoFile).
Not all governors reference sales and use tax in their annual addresses, but a lack of inclusion doesn’t mean that sales tax changes won’t be considered during this year’s legislative sessions. The best way to stay on top of sales tax news in 2017 is to sign up for the Avalara Sales Tax Newsletter.