Wednesday, January 16, 2002

Tax proposals floated amid state money woes

By Mark R. Chellgren
The Associated Press

        FRANKFORT — A poll conducted on behalf of smoking opponents purports to show broad support for a 75-cent increase in the tax on a pack of cigarettes. Another group says a tax break for the poor would benefit the economy.

        Despite a record state budget shortfall, there is no shortage of ideas before the General Assembly about what the state should do with its tax system.

        The proposals already pending range from a sales tax exemption for straw or another on honeybees to a tax credit for processing wild game donated to charity. Many of the ideas fall into the category of the hundreds of exemptions and special treatment for specific activities already contained in Kentucky's patchwork revenue code.

        The one initiative that might produce a more wide-ranging and planned overhaul of the tax system is still in limbo.

        The 2001 legislative session created a tax policy issues subcommittee that has been given the responsibility of taking a look at the whole tax system. The subcommittee's work has been delayed from its December 2001 deadline.

        “I think it's too early to tell,” said Sen. Richie Sanders, R-Franklin, the co-chairman of the tax panel.

        Mr. Sanders' Republican colleagues in the Senate have made clear they would view any reform effort with some skepticism if it meant raising anyone's taxes, even if the overall effort were neutral.

        Gov. Paul Patton again endorsed tax reform during his State of the Commonwealth address last week, but the administration will not be taking the lead.

        “We stand ready to address, on a bipartisan basis, comprehensive and revenue-neutral tax reform,” Mr. Patton said. “This is a subject that leaders ought to be able to agree on and do the right thing for the long-term future of Kentucky.”

        Interest groups with specific proposals have already started lining up.

        Kentucky Health Investment for Kids, a group aligned with anti-smoking efforts, released what it said was a poll showing 59 percent of Kentuckians favored putting 75 cents more on top of the 3-cent per pack cigarette tax.

        Mr. Sanders and his House counterpart, Rep. Harry Moberly, D-Richmond, have said a cigarette tax increase is unlikely.

        “I think we said 75 cents was no chance,” Mr. Sanders said.

        Undeterred by the $523 million revenue and budget shortfall this year, several groups promoted the idea Tuesday of a state version of the federal earned income tax credit for the working poor.

        The groups, which include the AFL-CIO, the Catholic Conference and the Kentucky Youth Advocates, said 390,000 families would benefit from a tax credit.


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