Kansas Legislation Calls For Tax Increases

March 9, 2010

Kansas Republicans have some ideas on how to help close its $460 million shortfall projected for 2011.

A proposal from Republican leaders in the Kansas Senate would call for $300 million in tax increases to help close the gap in the state’s 2011 budget shortfall.
Senate President Steve Morris, R-Hugoton, and Vice President John Vratil, R-Leawood, released those plans during a news conference Friday at the Capitol.
Currently, revised figures show that the state is facing an approximately $460 million budget shortfall for the fiscal year that begins July 1.
While it was not touted as a budget plan, Vratil and Morris did indicate that there were measures currently in various committees that would help close the budget gap.
Those measures included:

  • increasing tobacco and/or possibly increasing the alcohol tax;
  • remove some sales tax exemptions;
  • increase sales tax;
  • implement a nursing home provider tax that would enable the state to access some additional federal funding.

For thoughts on cigarette taxes. For thoughts on hospital provider taxes.

Removing sales tax exemptions has some economic rationale—it reduces price distortions caused by government. Increasing the sales tax rate, well, is what it is. Kansas already has a higher sales tax rate than most of its neighbors at 5.3% (CO: 2.9%; MO: 4.225%; OK: 4.5%). Of course the amount of border shopping depends on the vitality of the state’s border population. Or citizens might decide to purchase more online to escape the tax (barring Amazon taxes in the state).

More on Kansas here.

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