House committee approves first step in local government tax reform


By Jacqueline Pitts, The bottom line

Jacqueline Pitts

FRANKFORT, Ky. – Local tax reform in Kentucky would take one step closer to reality under a proposed constitutional amendment that was passed Thursday by the House Committee on Elections, Constitutional Amendments and Intergovernmental Affairs .

House Bill 475, sponsored by Rep. Michael Meredith, would ask Kentuckians in a statewide ballot if they support granting the Kentucky General Assembly the ability to authorize local governments assess and collect local taxes, license fees and franchise fees which are currently prohibited under the state constitution.

Currently, the constitution is restrictive on the types of taxes that local governments can impose.

“Kentucky is one of 17 states in the country that allow local governments to impose their own business taxes on employees and businesses,” said Representative Meredith. “Of those 17, Kentucky is among the five states most dependent on these business taxes at the local level.”

Representative Meredith stressed that local governments need more flexibility in the taxation process in order to remain competitive with neighboring states, and that HB 475 would be the first of three stages in the process.

If Kentuckians voted to amend the constitution, then the General Assembly would be tasked with bringing all stakeholders to the table and passing additional bill that would set the framework for how local governments can collect taxes. , according to Representative Meredith. The third and final step would be when local governments then adopt their own new ordinances within the framework defined by the General Assembly.

Representatives from the Kentucky Counties Association, League of Kentucky Cities and Greater Louisville, Inc. joined Representative Meredith to testify in support of HB 475.

Kevin Cranley, president of the Kentucky Retail Federation, spoke out against the measure at Thursday’s committee meeting.

Cranley said the Kentucky Retail Federation strongly opposes HB 475 because it could lead to a potential massive expansion of local sales tax without any guarantee that other local taxes would be reduced.

“This expansion has the potential to be detrimental not only to the retail community, but the citizens of Kentucky as a whole,” Cranley said. “We already tax Kentuckians on where they live and where they work. Now we are asking for additional taxes on where they eat, play and shop. “

The bill now goes to the entire House of Representatives for consideration.

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