Lawmakers in budget conference committee roll out tax reform plan

04/02/2018 10:22 AM

FRANKFORT — Republican House budget chair Steven Rudy revealed the majority party’s proposed tax reform on Monday, one day before the recess veto period.

The plan would generate $238.8 million in the first year of the biennium, and $248.1 million in fiscal year 2020, according to a scoring document provided to Pure Politics. The tax plan replaces the so-called “revenue bill” in the two-year budgeting process.

Lawmakers generate the revenue primarily through expanding the sales and use tax, something that had been floated in previous reform packages floated in the General Assembly. Those taxes would be applied to specific services listed in the graph below.

The plan which had been agreed to by Republican leadership in the House and Senate would also lower the corporate tax rates — a hit of $80 million, according to the scoring provided.

The plan also changes individual income brackets in Kentucky by applying a flat 5 percent tax rate, rather than the current six tiered system.

The restructuring of corporate and income taxing also sets up a fiscal imbalance, which is made up in the proposal using an increase on the excise tax on cigarettes.
Lawmakers on the committee sided with the House version of the plan, using a 50 cent increase on the excise tax per pack — bringing the taxes per pack to $1.10, a plan backed by right-leaning think tank the Pegasus Institute.

The e-cigarette tax is not included in the final bill, but was included in the hand out to media on Monday.

GOP super majorities in the House and Senate are expected to pass the plan on Monday, before the start of the 10-day veto recess. Lawmakers will have one-day after the veto recess to attempt to pass additional legislation, and override vetos issued by Gov. Bevin on Saturday, April 14.

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