The Kentucky sales tax was enacted in 1960 under Democrat Bert T. Combs as a 3 percent retail tax on a wide range of tangibles. In 1968, the tax was increased to 5 percent under Republican Gov. Louie Nunn and to 6 percent in in 1990, under Democrat Wallace Wilkinson. From the beginning, there have been excessive exemptions. Kentucky currently taxes just 29 services (17 percent) of 168 services tracked.
I propose revising the state tax code to extend the sales tax to the entire services economy over four years, beginning with 3 percent and rising to the uniform 6 percent sales tax, covering all goods and services.
During the final year of this transition period, if this expanded revenue is adequate, it could be prudent to lower the entire sales tax to 5 percent. Also, perhaps the state income tax can be safely reduced. Emergency enactment is strongly urged to increase the tills immediately. This is the first step to address the massive public pension problem.
This is not a tax increase, nor a new tax. It is simply an extension of the sales tax on services providers that should have been included from the beginning.
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Don J. Dampier