Last night, Governor Parkinson announced that he would be seeking two tax increases in Kansas this year. He is seeking a 55 cent per pack tax increase on cigarettes and a 1 percent hike in the sales tax taking it from 5.3 to 6.3 percent. This would amount to a $378 million tax increase.
Besides taking more money from the private sector and using it to prop up current levels of government spending, it most likely will push business out of the state. At the proposed level, Kansas would have the highest tax rate when compared to its neighboring states. In the Kansas City area, which borders Missouri, Kansas’s tax rate would be competing with a 17 cent tax rate in Missouri. With a $1.34 tax rate, would business leave the state? A recent report by the Mackinac Center for Public Policy estimates that at the current tax rate over 19 percent of cigarettes consumed in Kansas are purchased in another state.
The Governor’s sales tax increase would also be damaging. At a time when families and businesses are not doing well financially, he wants to raise the sales tax to 6.3 percent. As with the cigarette tax being the highest of neighboring states, the sales tax would also become the highest of any neighboring state. The second highest would be Nebraska with a 5.5 percent sales tax. The Governor is moving in the wrong direction with these tax increases. He should understand that to make a state more business friendly, one should lower taxes (this would even help in Kansas’s economic recovery). For a list of neighboring state tax rates, click here (Table 15 for sales tax and Table 18 for cigarette taxes.
ATR asks all Taxpayer Protection Pledge signers to stand in opposition to these tax increases. For a list of Kansas Pledge signers, click here.
Click here to see ATR’s press release opposing the Governor’s proposal.
Photo credit: incurable_hippie