With state income tax targeted for elimination and property taxes rising in many counties as a predictable consequence of state budget cuts, local and state governments now appear to be elbowing one another to see which can raise sales tax first. The only certainty is that taxpayers will end up getting bruised.
Gov. Sam Brownback and the 2013 Legislature got things started by letting the statewide sales-tax rate of 6.3 percent drop last July only to 6.15 percent, not to 5.7 percent as scheduled. That tax hike left Kansas second only to Mississippi in the nation for the sales tax it charges on food, which is subject to no such tax in 37 states.
After that legislative debate, Senate President Susan Wagle, R-Wichita, wrote in The Eagle that “we changed the trajectory of our state’s tax policy by moving toward a FairTax model that targets the taxation of consumption (sales) rather than productivity (income)” – which sounded like a warning that more sales-tax hikes could be coming. In addition, Rep. John Rubin, R-Shawnee, plans to introduce legislation to replace most existing Kansas state taxes with such a consumption tax.
As Kansas strains to deal with declining tax collections and reserves according to Brownback’s plan to become a state without an income tax, the sales tax will be one of the only places to go for more revenue.
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But sales tax is applied by local governments, too, and there are competing prospects for raising it beyond the current 7.15 percent total rate charged in the Wichita area.
The city of Wichita has spent the past couple of months gathering community input about whether to go to voters with a sales-tax increase proposal. No size or duration of such a hike has been mentioned, but it might fund business recruitment, a new or renovated convention center and performing arts space, an improved bus system, water and sewer system upgrades, a new Central Library and a future water supply.
Then, earlier this month, Sedgwick County Commissioner Karl Peterjohn proposed asking voters in November to raise the sales tax countywide by as much as 1 3/4 cents. He touted the higher sales tax as a way to replace the county’s property-tax mill levy and offer a “shot in the arm to existing businesses and property owners.”
Kansas and Wichita also keep adding special taxing districts to benefit developers in which sales tax is 1 to 2 percent higher, usually targeting visitors or destination shoppers such as at Cabela’s in Wichita. So total tax rates of 8 to 9 percent are common around the state, with a Junction City district topping out at 11.15 percent sales tax.
In a survey last year by Fort Hays State University’s Docking Institute of Public Affairs, the preference was to leave all tax rates – income, property and sales – where they were. But as the pressure rises on the sales tax, Kansans would do well to hold onto their wallets.
For the editorial board, Rhonda Holman