Tuesday, January 7, 2003

Patton outlines tax-hike targets


Excise sales, corporations top list

By Mark R. Chellgren
The Associated Press

FRANKFORT - Smokers, drinkers and Kentucky corporations are among the potential sources of new tax revenue Gov. Paul Patton is considering to shore up Kentucky's beleaguered budget.

Mr. Patton gave a peek at some of the nooks and crannies he has been examining forwhat is projected to be a $500 million budget shortfall in the next 18 months.

During an appearance before a pre-legislative conference of editors and broadcasters sponsored by The Associated Press, Mr. Patton rattled off a series of statistics about cigarette tax increases. While the national average for the tax on a pack of cigarettes is now 58 cents, compared with Kentucky's 3 cents, the average of Kentucky's biggest competitors for sales is 20 cents. A 20-cent tax would raise $75 million a year. And Mr. Patton tried to make the case that the state has done much for tobacco farmers, who are not really hurt by a higher tax in any event.

Kentucky also does not tax alcoholic beverage sales, except for consumption on the premises, such as a bar or restaurant. Mr. Patton said there was no reasonable justification for such an exemption and removing it would raise $24 million a year.

Mr. Patton also repeated the case he has been making for several months that corporate taxes have not kept up. Corporate taxes as a portion of the entire General Fund are half of what they were in 1990, when they were increased, Mr. Patton said. Just returning the taxes to their previous level would raise about $350 million a year.

Although he has been careful to avoid taking a public position on budget cuts versus tax increases as a way to get out of the half-billion dollar budget mess, it is clear Mr. Patton is leaning toward making a proposal for overhauling taxes. He made such a proposal in 2000 but was ignored by the General Assembly.

Legislators now face a session starting today in which they still have not fulfilled their obligation to pass a budget.




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