Thursday, January 27, 2000
Patton wants gas tax increase
BY PATRICK CROWLEY
The Cincinnati Enquirer
FRANKFORT — With prices at the pump the highest they've been in years, Gov. Paul Patton could not have picked a worse time to propose an increase in Kentucky's gas tax.
But the gas tax increase he unveiled Wednesday is just one component of his Revenue Fairness and Recovery Program.
Mr. Patton couched the program, which he is asking the legislature to approve, as necessary for Kentucky's continued growth and prosperity.
“These actions will not solve all of our problems, but the lack of action will be an admission that we're not ready to move into the 21st century,” Mr. Patton said.
The plan cuts some taxes while raising others, with the net effect of raising about $290 million in new money for the state's general fund.
For instance, the plan phases out the state's portion of the property tax on motor vehicles that is paid each year when license plates are renewed. But it imposes the state's 6 percent sales tax on repairs and maintenance to personal property, such as cars, computers and furniture.
The plan would eliminate state income taxes for 200,000 low-income Kentuckians; reduce taxes for 950,000 people; not make any change for 275,000 taxpayers; and raise taxes on 412,000 Kentuckians who make more than $75,000 a year.
Rep. Joe Fischer, R-Fort Thomas, one of the few lawmakers who attended the presentation, said Mr. Patton's plan is going to be a hard sell in the General Assembly.
“I came down here to cut taxes, not to raise them,” Mr. Fischer said. “I think there is some merit to lowering or cutting the tax for low-income people, but I think it's a mistake to target our most productive citizens with a tax increase.”
Mr. Patton said the tax system needs to be restructured for a couple of major reasons.
He said Internet and mail-order purchases cost Kentucky about $140 million a year in lost sales taxes.
The legislature has also cut 13 taxes over four years, reducing revenue by $378 million a year.
The gas tax increase, however, is not included in the $290 million. Gas tax money goes into the state's road fund, which is separate from the general fund.
The hike to the state's 16.4 cents a gallon tax would be 7 cents phased in over two years. It would raise $319 million in those two years. A survey Wednesday on a gallon of unleaded gas showed prices of $1.35 in Frankfort, Crittenden and Georgetown and $1.37 in Dry Ridge.
“I'm not hearing from any of my constituents that they want a gas tax increase,” said Senate President Pro Tem Dick Roeding, R-Lakeside Park. “I want to see all the details of the plan, but a lot of us in the legislature have signed "no new tax' pledges, so this is going to be hard to vote for.”
Rep. Paul Marcotte, R-Union, said Mr. Patton made a smart political move by announcing his budget on Tuesday and then his tax plan a day later.
The governor's budget included millions in proposed spending for new projects, including a museum, tourism projects, parks and civic centers in Northern Kentucky, Mr. Marcotte said.
SOME PROPOSED CHANGES
Details of Gov. Paul Patton's tax proposals:
(Items in parentheses indicate tax cuts. Other figures indicate tax increases. The first figure given is for the 2001 fiscal year; the second, for 2002.)
General Fund
• Adopt federal income tax personal deductions and exemptions, modified alternative tax: ($25 million) ($54.8 million).
• Extend corporate license tax to limited liability corporations, $0, $2.5 million.
• Change calculation for domestic holding companies: $0, ($4.2 million).
• Revise rate-setting for state property tax: $6.5 million, $11.3 million.
• Eliminate property tax on vehicles, boats over three years: ($14.7 million) ($41.9 million).
• Sales tax on personal property repair and installation labor: $165 million, $188.1 million.
• Exempt all prescription drugs from sales tax: ($17.7 million) ($20.1 million).
• Sales tax on cable, direct television; roll in local taxes on telecommunications services: $29.8 million, $64.9 million.
• Credit for race tracks: ($1.2 million) ($2.3 million).
Road Fund
• Raise fuels tax by 7 cents over two years: $115 million, $204 million.
• Credit for trade-in value on new car purchases: ($31.5 million) ($31.5 million).
• Sales tax exemption for trucks used in interstate commerce: ($5 million) ($5 million).
— The Associated Press
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