After the legislature passed the next two-year state budget and a tax reform package—which contains provisions to lower the income tax to 5% and broadens the sales tax base to some services—on Monday evening, the Kentucky Chamber of Commerce released the following statement Tuesday:
The Kentucky General Assembly has now enacted a major pension reform bill, a tax reform bill and a biennial budget in the closing days of the 2018 session. While the process left much to be desired, we commend the General Assembly for taking difficult steps to stabilize our pension systems, modernize our tax code, produce new revenue for education and most important, start turning the corner on the dire financial condition of our state government. Kentucky’s business community wants our state to prosper so we can get back to properly funding education as the best investment in our future and to sustaining other critical services that our fellow Kentuckians deserve.
While the Kentucky Chamber had called for even greater reforms in both taxes and pensions, we consider the recent legislation – viewed as a package – to be an important first step toward improving Kentucky’s competitive position, encouraging investment in our communities and creating high-quality jobs.
The tax plan includes many long-standing priorities of the business community including single sales factor, lowering personal and corporate tax rates, repealing the inventory tax and broadening the base of sales taxes – all recommendations previously made by numerous non-partisan economists. It also includes half of what the Chamber had proposed for the cigarette tax, another step in the right direction.
We commend the legislature for restoring most of the proposed cuts to education and having the courage to provide additional revenue to make that possible. With the governor and legislature putting hundreds of millions of dollars into rescuing the public retirement programs, it is extremely difficult to sustain funding for basic investments in education. We applaud the General Assembly for working to protect core funding for our schools.
We anticipate that more work will need to be done as these laws are implemented. As the state’s largest business association, we will continue to monitor these reforms and their impact on existing businesses and industries, in order to make sure the basic intentions and the financial estimates behind the legislation are fully realized.