Archive for Wednesday, February 17, 2010

Legislators conclude they need more information before they can make changes to tax credit system in state

February 17, 2010, 7:59 a.m. Updated February 17, 2010, 2:15 p.m.

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— Two audits released Wednesday provided new details about the Kansas system for providing tax credits and exemptions to various groups and programs.

But legislators agree that more information is needed if they are going to make changes to the system and find the state more revenue.

“I think this will make an excellent study for an interim,” said House Taxation Committee Chairman Richard Carlson, a St. Marys Republican.

One lingering question that wasn’t answered by the Legislative Division of Post Audit reports is whether the tax policies are working in terms of generating jobs and economic activity in Kansas.

Rep. Ann Mah, a Topeka Democrat, said a follow-up audit looking at the effect of the elimination of taxes and fees in recent years would be helpful to determine whether jobs were saved or created as a result.

“To me, that’s where the big bucks are,” Mah said.

Legislators have been discussing the tax policies and the potential of rolling back some sales tax exemptions. The goal is to find the state more revenue to fund government operations. Kansas is facing a projected $416 million hole in the next budget, which begins July 1.

Carlson’s committee has endorsed a bill that would eliminate five unused income tax credit programs that legislators approved in the past decade. That bill is awaiting debate in the House. The committee is still working on a bill that would remove exemptions and modify the Kansas sales tax policies that exempt an estimated $4.2 billion annually.

Many of the findings in the audits were recommended by the Kansas Advisory Council on Intergovernmental Relations. The group of state and local officials looked at much of the state’s tax structure and proposed eliminating some seldom or unused tax credits, as well as eliminating nearly $182 million in sales tax exemptions.

Both the auditors and Kansas Advisory Council on Intergovernmental Relations agreed that it would be a better policy for the state not to specifically exempt organizations by name from the sales tax, but rather to exempt categories.

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