TOPEKA — Opponents of a sales tax increase warned Tuesday of job and economic losses if lawmakers raise the rate.
"It will take money out of family budgets that was not taken out before," said Art Hall, director of the University of Kansas Center for Applied Economics and a former economist for Koch Industries.
Based on computer simulations, the tax increase could result in 26,000 fewer jobs and $2 billion less in personal income over six years than if there is no increase, Hall told the House Taxation Committee. State jobs could grow by up to 7,000 positions.
The committee listened to its second day of testimony about the proposed increase. Gov. Mark Parkinson, a Democrat, has suggested Kansans pay 6.3 percent instead of 5.3 percent in sales tax for the next three years to help plug a $400 million gap projected for the 2011 budget.
Last week, supporters of the increase, House Bill 2475, urged lawmakers to pass it and stave off more cuts to state agencies. They predict that balancing the budget with further cuts would cripple public education and damage programs for the elderly, disabled, mental health and roads.
"We urge you, please, no more waiting lists for vulnerable Kansans," said Tom Laing, director of InterHab, a statewide coalition of groups serving the developmentally disabled. "No more community workers in poverty. No more closed schools and crowded classrooms, and no more abandoned senior citizens."
Opponents of a tax increase maintain that the state's problem is not revenue but that it is spending too much.
Kansas ranked 31st in terms of sales tax in a study by the Small Business & Economic Council, said Daniel Murray, state director for the National Federation of Independent Business. It is the lowest-ranked state compared with neighboring states. The lower the ranking, the higher the sales tax.
Increasing the sales tax would hurt small businesses, Murray said.
Some lawmakers questioned why other indexes, including one developed by the state, showed Kansas with a better tax rating and why the state was consistently listed as having one of the top 10 business-friendly environments.
Murray said he was not familiar with those studies.
Kent Eckles, vice president of government affairs for the Kansas Chamber of Commerce, said the increase would make Kansas' sales tax the highest in the region and could drive away business. And it is unlikely to remain temporary, he said.
"History of the sales tax in Kansas is it is always a forever tax," Eckles said. "It always seems the sunset gets repealed or ignored and it stays forever."
Although many business purchases, such as equipment and raw materials, are exempt from the state sales tax, businesses do buy many items to which the sales tax applies, he said.
Chairman Rep. Richard Carlson, R-St. Marys, said the committee might vote on the issue today.