Kansas Sales Tax, Cigarette Tax Going Up
Brownback, instead, pushed a plan that included raising the state sales tax from 6.15 percent to 6.5 percent in July, along with raising the Kansas cigarette tax by 50 cents.
He warned failure to approve the package would mean either the budget for Kansas schools would be cut by $200 million or an across-the-board 6.2 percent cut for the state’s regents universities.
The Brownback administration projects the two-bill package approved by the legislature will bring in $384 million. It does not take a mathematician to realize that falls short of filling the $400 million budget hole.
Republicans in the Kansas Legislature told the Associated Press Brownback would still have to cut $50 million from the budget during the fiscal year that begins July 1.
The two bills, one covering the cigarette tax hike while the other addresses the sales tax increase, also include a small increase in taxes for business owners and farmers.
Sen. Hensley said the budget package put the state officials in the position of “playing Robin Hood in reverse” because Kansas residents at or below the poverty line would pay a higher portion of their income in sales tax than would richer Kansans.
While Democrats worried about the poor, the Kansas Economic Progress Council’s Bernie Koch said business owners would actually suffer the most.
“It’s not the sales tax you pay on a cup of coffee; it’s the sales tax the business pays when it buys the coffee cup and the coffee,” he said.
A Kansas Center for Economic Growth study showed the state was at a disadvantage compared to its neighbors in what businesses had to pay in sales taxes before the legislature approved raising the tax to 6.5 percent.
The study showed that of all taxes paid by a Kansas business, 28 percent go to sales taxes while the average business in the six-state region paid just below 26 percent for Fiscal Year 2013. That is higher than the nationwide average of 21 percent.
“It’s hard to image that what we have right now could get worse,” Annie McKay, the executive director of the Kansas Center for Economic Growth, told the Washington Post, “but this actually makes it worse.”
Despite the need to fill this $400 million budget deficit, Brownback said he remained confident Kansas was on the right path to economic prosperity.
He pointed out his “Roadmap for Kansas” cited two objectives or metrics by which the success or failure of the plan could be judged: increasing per-capita personal income and growing private sector employment.
“Our tax policy is working,” Brownback said. “The proof of that can be seen in the number of working Kansans, our low unemployment rate and the fact that working Kansans have more money in their pockets to save or spend as they see fit.”