That wild idea passed by the House but frozen in the Senate was to impose the state sales tax on services, not just the stuff you walk out of the store with in your hand.
Remember that bill, which would have put the sales tax on services ranging from vehicle towing to security services, haircuts and manicures, pet care, even dating services for Kansans with apparently not good social skills or who wear too many plaids?
The House, remember, passed the bill, tying it to an into-the-future cut in sales tax on groceries, the Senate, well, it just sort of got lost over there on the east (that’s the Senate side) of the Statehouse.
Last year’s bill wasn’t a big money-maker for the state, maybe $50 million or more, but the idea of Rep. Kristey Williams, R-Augusta, pointed at the hard line between physical goods and services, though she chose a pretty narrow bunch of services to subject to the sales tax.
Now…should it cost the Legislature hundreds of millions of new dollars to satisfy the Kansas Supreme Court and avoid the shutdown of Kansas public schools, there may be another look at those sales tax exemptions.
Key in Kansas is that we don’t tax component parts or ingredients of what later becomes an item for retail sale. If the car company buys seats for that new vehicle, it doesn’t pay sales tax on those seats, but collects for the state the sales tax on the entire car once the dealer sells it. Pretty strong idea: You pay sales tax on the car, not the parts that later become a car and then again on the car you drive off in.
Now, services are a different deal, of course, and lawmakers note that those services are the final product. Whether it’s a new haircut, day-care-for-dogs, towing that car, or providing the burglar alarms at your house, those are final services, end of the deal.
The biggies, of course, are service-providers such as doctors, lawyers, accountants, which have considerable Statehouse clout. Tax all the services, and it could be $600 million or more in state revenue enough to solve the school finance deal, probably getting back into the business of building roads, and maybe taking care of prisoners, maybe taking the sales tax off groceries.
Is that possible? In an election year in which the entire Kansas House stands for re-election and statewide officers are on the ballot?
It would probably take some pretty careful parsing-out of just what services would be subject to a sales tax and which wouldn’t. Walking dogs? Probably OK, but you don’t want to mess with cats, their owners being…well…cat people.
Nope, nobody wants higher taxes on anything, but this may be another year of a tax increase on something.
Practically, the sales tax rate is about as high as it is going to get if legislators want to still be able to buy fire insurance on their homes.
And income taxes? Well, we don’t know yet whether last year they were raised enough to pay for whatever the court decides is needed for public schools.
Property taxes? Probably the most sensitive of all taxes, unless lawmakers can come up with a way to point at those who don’t pay them and focus attention of everyone who does pay property taxes on those who don’t.
Looks like a year of hunting for the least politically and socially powerful registered voters, doesn’t it?
Syndicated by Hawver News Company LLC of Topeka; Martin Hawver is publisher of Hawver’s Capitol Report—to learn more about this nonpartisan statewide political news service, visit the website at www.hawvernews.com