Kansas would replace its corporate income tax and lower the sales tax rate in favor of a tax on Girl Scout cookies and other currently exempted purchases under a plan outlined last week to the Joint Committee on Assessment and Taxation by a state senator.
Sen. Dick Kelsey, R-Goddard, said the state could make up lost revenue by imposing the sales tax on professional services and eliminating tax exemptions on sales by churches and nonprofit organizations, including the Girl Scouts and the YMCA. Lawmakers voted down a similar plan in 2010.
Kelsey would also re-impose a sales tax on utility bills that was removed in the 1970s and eliminate the sales tax on food purchased for home consumption.
The changes would bring in an additional $837.6 million a year, he said, which could also be used to reduce the individual income tax rate.
State officials said the corporate tax generates $255 million a year. The increase in the state sales tax to 6.3% from 5.3%, which went into effect July 1, is expected to bring in $315 million a year.
Kelsey compared the state’ sales tax structure to a house that was built in uncoordinated stages.
“You can live in it, but it is not really like a home that has been designed to do what we do best and live,” he told the joint committee.
Revenue Secretary Joan Wagnon told lawmakers that she agreed with Kelsey’s plan to eliminate most sales tax exemptions. Lowering the corporate income tax would cut revenues, she said, but it would help attract businesses to Kansas.