FRANKFORT — A Blue Ribbon Tax Commission appointed by Gov. Steve Beshear is recommending raising about $690 million in new revenue by lowering corporate and individual tax rates while limiting some deductions, raising tobacco taxes and extending the sales tax to some services.
The proposals face an uncertain reception in the General Assembly which has been reluctant to take on tax reform because of fears lawmakers will be accused of raising some taxes.
Even Lt. Gov. Jerry Abramson, who chaired the commission, concedes some of the proposals aren’t likely to pass legislative muster.
“I think there are some items on here that have little or no chance,” Abramson said after Thursday’s meeting. “But that’s the politics of the General Assembly and the governor.”
Even if the full package were to clear the legislative hurdle, the full amount might not be available for expanded services because the legislature will also receive recommendations from a pension tax reform task force to begin annually appropriating more than $300 million to shore up those funds.
“There’s connectivity between those two issues – there’s no doubt about that,” Abramson said. “But we didn’t make our decisions based on any looming financial cliff from the pension side of the equation. We tried to meet the governor’s five standards: fairness, competitiveness, elasticity, simplicity; and adequacy.”
That last standard might be hard to achieve as well. Abramson said the state budget has been cut $1.6 billion in the last five years, more than double the full amount achieved by the recommendations.
Changes to motor fuel and motor use taxes will reduce revenues to the road fund by $13 million.
Rep. Jim Wayne, D-Louisville, a non-voting member of the commission, said the additional amount for the state general fund “is not enough but it’s headed in the right direction.”