Thursday, March 25, 2004

N.Ky chamber endorses tax plan


Overall plan praised, but changes sought

By Patrick Crowley
The Cincinnati Enquirer

FORT MITCHELL - Hoping to provide a late boost to Gov. Ernie Fletcher's proposed overhaul of the state tax code, Northern Kentucky's largest business group endorsed most of the plan Wednesday.

But with a Monday deadline looming for bills to be passed in this session of the General Assembly, support from the Northern Kentucky Chamber of Commerce may be moot.

Still, Fletcher said in a statement he was "thrilled" with the endorsement. "Northern Kentucky has a growing economy that is fueled by an excellent labor force, two interstate highways and an international airport," Fletcher said. "Tax modernization is an issue that has been discussed and debated for far too long. I appreciate the fact that business leaders agree it's time to take action."

Northern Kentucky Chamber President Gary Toebben called the state's tax code "antiquated" and in need of change.

The chamber is in "strong agreement" with lowering the corporate income tax rate and personal income tax and eliminating the business license tax and intangibles tax. Those changes "will encourage business investment, stimulate the economy and create new jobs," the chamber said in a statement.

But the chamber also wants some changes to the plan, Toebben said.

Toebben said Fletcher's plan levels too many taxes on businesses and reduces tax incentives in enterprise zones, which entitle companies in the zones to tax breaks on investments in new equipment and facilities.

Enterprise zones are located in Covington and parts of Campbell County, including Newport.

"Several components of the proposal need to be revised or clarified if the plan is to avoid unintended consequences," the chamber said.

Fletcher did not comment on the chamber's suggestions.

The Kentucky Chamber of Commerce has also endorsed the plan.

Fletcher has proposed a combination of tax cuts and tax increases to be "revenue neutral" at first but which, in Fletcher's opinion, would turn the state onto a different road to economic growth.

He would, among other things, reduce income taxes and repeal the state tax on stocks and bonds; cut the top corporate income tax rate to 6 percent from 8.25 percent; and repeal the corporate license tax.

However, more companies would be subject to taxation. And to make up for cuts, taxes would be raised on tobacco products and alcohol and a gross receipts tax would be imposed on all telecommunication services, including cellular and land-line telephone calls and cable and satellite television.

Though he talked extensively about "tax modernization" while campaigning for governor last year, Fletcher did not introduce the complex plan until early March, far too late for such a complex and far-reaching plan, some critics have charged.

The Associated Press contributed. E-mail pcrowley@enquirer.com




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