As the prospect of tax reform is once again emerging with legislators facing difficult budget realities, the Kentucky Chamber sent a letter Wednesday to members of the General Assembly explaining the business community’s priorities to make the state more competitive and potentially generate more revenue.
In the letter, Kentucky Chamber President and CEO Dave Adkisson explains the state’s largest business advocate is encouraged by the developments on the issue in the 2018 session and what meaningful reforms could entail.
“The Kentucky Chamber recognizes the need for sufficient revenue to support education at all levels and to sustain the important operations of government. It also understands the impact of tax policy on the ability of the state to compete in the global economy and has consistently advocated reforms that would improve Kentucky’s competitive position,” the letter states.
Pro-growth tax reforms, Adkisson says, would achieve the state’s goal of generating the much-needed revenue while also spurring economic growth and job creation.
The letter points to reforms including:
- Moving toward a more consumption-based tax system
- Reforming the state’s income tax rules to more closely mirror that of the federal government
- Avoiding tax pyramiding, where sales and use taxes are imposed at more than one level
- Clarifying Kentucky’s sales and use tax definitions to ensure consistent and equitable enforcement
- Repealing the Limited Liability Entity Tax—the gross receipts tax
- Changing the corporate income tax to allow corporate income to be based off sales rather than the current three-factor formula of sales, property, and payroll taxes currently in effect
- Exempting business inventory from the property tax
As some of the measures proposed could decrease tax revenues in some areas, Adkisson noted the Chamber’s position of being open to other revenue-generating changes in Kentucky’s tax code, including consumption-based options. The Chamber has long advocated for an increase of $1 per pack on the cigarette tax and other revenue-generating measures.
“The Chamber does not believe tax reform must be revenue neutral and understands the importance of incorporating the elements of balance and sustainability into comprehensive reform,” Adkisson said.
Adkisson concludes the letter by telling legislators the Chamber welcomes the opportunity to provide more detail on tax reform proposals dealing with the critical issue of tax reform.