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Archive for Tuesday, January 22, 1991

T SOLD ON SERVICE SALES TAX

January 22, 1991

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A tax increase by any other name is still a tax increase.

That was the reaction from Lawrence businesses that would have to add a 4.25 percent sales tax to the cost of their services under a budget plan unveiled today by Gov. Joan Finney.

A local architect, an attorney, two barbers and an insurance broker offered similar criticism of the plan. They said that if the sales tax is added to the cost of their services, the expense will be passed on to their customers.

"It's smoke and mirrors," said David Evans, a partner with Gould Evans Architects PA, 706 Mass. "This doesn't make sense. It doesn't prevent the public from paying for this with taxes.

"We'll do like every other business in the community does, we'll pass it on to the public," Evans said. He said if the sales tax is imposed, the company may consider doing more of its business out of its Missouri office.

Under Finney's proposal, a total of 35 current exemptions to the 4.25 percent state sales tax would be eliminated, and the sales tax would be imposed on 77 services in Kansas that presently do not collect sales taxes.

THE EXTENT of what is expected to be intense opposition from affected businesses was evident from talking to a few Lawrence business people.

The only differing opinion was offered by Mark Buhler, a Douglas County commissioner and sales manager and vice president of Stephens Real Estate, 2100 W. 25th.

"You know, what we all do in our profession is defend what we got and try to get more," he said. "If it's fair and it's consistent, I don't have a problem."

Buhler said he doubts that the majority of people in the real estate business would agree with him.

"There's no question it will dampen the real estate business," he said.

But Buhler also pointed out that the reduction in property taxes that will come from returning additional sales tax money to local communities in Finney's plan may also help.

"Joe Homeowner may pay additional sales taxes of $250 and get back $280 in property taxes," he said.

But most local business people didn't see it that way.

Dick Hamilton, owner of Excalibur of Westminster Hair Styling Salon, 2711 W. Sixth, said "it's just a new tax" that will be passed on to the public.

HAMILTON suggested that increasing costs may result in more people operating hair salons illegally out of their homes.

Lawrence attorney John Lungstrum said he opposed Finney's proposal for taxing services on three levels as chairman of the board of the Lawrence Chamber of Commerce, as vice chairman of the legislative committee of the Kansas Bar Assn., and as an attorney.

He said he and the two organizations he is with contend adding a sales tax on services "simply passes the tax on to consumers and does not accomplish the goal of broadening the tax base. It simply increases taxes."

Bob Johnson, president of Charlton Manley Inc., an insurance firm at 211 E. Eighth, agrees that the state faces large budget problems, a situation he described as "a mess."

But he said a sales tax on insurance would just be passed on by insurance companies to the public in insurance policies.

For example, he said, "That a youngster operating his first car would have to pay a higher insurance premium."

County Commissioner Mike Amyx, who also operates the Amyx Barber Shop, 842 Mass., said he knows about the state funding problems from listening to local legislators.

"My concern is that we would tax new areas to offset a tax somewhere else," he said. "It seems to me a better way to settle this is just to reduce spending."

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