Panel: Raising Sales Tax, Cutting Business Taxes Options for Increasing State Revenue | Jackson Free Press | Jackson, MS

Panel: Raising Sales Tax, Cutting Business Taxes Options for Increasing State Revenue

Lt. Gov. Tate Reeves reiterated his goals to continue to make Mississippi the most desirable state for capital investment by making changes to the state's tax code at the legislative tax panel Oct. 3.

Lt. Gov. Tate Reeves reiterated his goals to continue to make Mississippi the most desirable state for capital investment by making changes to the state's tax code at the legislative tax panel Oct. 3. Photo by Imani Khayyam.

— The State of Mississippi needs revenue, and lawmakers have three options: increasing the state's sales tax rate, apply sales tax to more items or sell more stuff.

Mississippi House of Representatives Speaker Philip Gunn outlined those options for the State's Tax Policy Committee this morning. The group met this morning at the Capitol to discuss possible reforms Mississippi can make to its tax code, and recommendations of Tax Foundation economist Nicole Kaeding. The Tax Foundation is a conservative-leaning, "business-friendly" tax-policy think tank. Several top corporate executives organized the group in 1936; its mission is "to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government."

Gunn's options can work in concert for the state, Kaeding said. "The bottom line is if we want to increase sales tax revenues, we can do one of those three things or a combination thereof," Gunn said at the meeting

Kaeding provided lawmakers with an overview of recommendations for tax-policy reform in Mississippi, based on the Tax Foundation's policies. She suggested that Mississippi lawmakers should not raise or change the tax rate but instead look at broadening the tax base, by applying sales tax to more items, including legal, accounting, fitness, barber or veterinary services throughout the state. She also mentioned adding a sales tax to gasoline in the state, separate from the gasoline tax.

"I think the base is actually where you need to focus on in terms of making it less broad on business transactions and more broad on (service) transactions," Kaeding said.

The Tax Foundation supports the elimination of the franchise tax and business input taxes in the state, and Kaeding insisted that the corporate franchise tax is the most harmful tax a state can have on the books. She suggested that Mississippi speed up the elimination of the state's franchise tax, which is set to phase out by 2028. The plan to eliminate is part of the Legislature's Taxpayer Pay Raise Act of 2016.

Lt. Gov. Tate Reeves reiterated his goals to bring more investment to the state through reforming the tax code.

"My goal is to make Mississippi the most attractive place in America to invest capital and create jobs—that's the long-term goal, and one we've made significant progress on with the franchise tax, but we've got more to do and we will continue down that path," Reeves said.

Most lawmakers spoke in favor of implementing reforms in a "revenue neutral" way, meaning changing the tax code in ways that would not increase or decrease revenue in the State's budget.

Lawmakers expressed a desire to hear from speakers from outside the Tax Foundation as well. Kaeding that is a good idea, although she will continue to work with lawmakers and the panel to help formulate a plan.

Rep. Sonya Williams-Barnes, D-Gulfport, asked Kaeding to include on her future presentations how tax reforms correlate to funding state services like education.

"I'd like to see tax reform in this State be to benefit education, roads and bridges, and not place the burden on working families," Williams-Barnes said.

Email state reporter Arielle Dreher at Arielle@jacksonfreepress.com and follow her at @arielle_amara for breaking news.

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