Senate adds tax breaks to bill aimed at adding revenue
05/27/2010 04:02 PM
The Senate budget committee on Thursday inserted new tax break provisions into a bill designed to generate revenue through a few tax-code tweaks.
Sen. Bob Leeper, an independent from Paducah and chairman of the committee, said the financial effects of the tax credits as well as new incentives for companies would be minimal in this next two-year budget. But he said it was unclear what effect they would have on future years.
The House version of the revenue bill added $50.9 million in 2011 and $38.4 million in 2012, Rep. Rick Rand, the House budget chairman and a Bedford Democrat.
Here’s a brief look at the Senate’s changes, which the Democrats and Republicans on the panel approved unanimously:
- An “Endow Kentucky” tax break is aimed at donors who establish an endowment fund for a community foundation or county-specific fund. They would receive a tax credit worth 20 percent of the gift’s value. It would have a maximum break of $10,000. That will cost Kentucky roughly $500,000 in 2011 and 2012.
- An extension of an environmental stewardship tax break would affect Toyota and other car manufacturers in the state. The provision was already on the books and is just being extended. The $1.1. million cost of it already was built into the budget, so that wouldn’t have to be subtracted, Leeper said.
- A new credit for liquor distillers starting Jan. 1, 2013 would be taken off the distilleries’ ad valorem tax on the actual amount of liquor the distillery had. Sen. Ernie Harris, a Crestwood Republican who sponsored the amendment, said one distillery already has pledged to expand, which would create jobs and balance out any revenue lost by the tax break.
- A new tax credit for businesses is aimed at attracting manufacturing companies to rural areas. The “New Market Intiative” would apply the break to companies that move into “low-to-moderate” income areas for business investments, said Sen. Robert Stivers, a Manchester Republican. He said it wouldn’t affect this year’s budget but could affect revenue in future years.
Leeper said there isn’t hard data to show how much these new breaks will cost Kentucky because some of them may create new jobs, which will generate new income and payroll tax revenue.
The Republican-controlled Senate has taken the approach of pushing tax breaks and incentives in order to try to spur job creation. The Democratic-led House tried to advocate for $1.1 billion in new construction projects, which leaders said would potentially put thousands of Kentuckians to work. Many House Democrats are still lamenting the fact that Senate wouldn’t go along with those projects because the Republicans were uncomfortable with the state taking on more debt.
- Ryan Alessi
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