According to the Department of Revenue budget proposal, raising the enforcement tax from 8% to 16% would generate an additional $52.3M in 2018. Current enforcement tax at 8% generated $67.8M in 2016.
It appears the Department of Revenue expects some slowing of sales due to the tax increase as revenue is not doubled from current collections. Instead of forecasting $67.8M in revenue doubles to $135.6M, they have forecast increased revenues of $120.1M ($67.8M current plus $52.3M forecast). To get $120.1M of revenue from a 16% tax would require gross sales of $750.6M.
|
|
Sales
|
Tax Rate
|
SGF
|
|
2016
|
$847.5M
|
8%
|
67.8
|
|
2018
|
750.6M
|
16%
|
120.1
(67.8+52.3 additional)
|
|
-94.9
|
|
+52.3
|
This forecast indicates a $94.9M reduction or (11.2%) in total alcohol sales. To get that extra $52.3M, Kansas retailers are being asked to absorb an 11.1% loss. Those retailers near the Missouri border the loss will be much greater. This is not a responsible fiscal policy.
This is a terrible proposal. Here are some of the key arguments to oppose it.
1. The Department of Revenue’s own numbers indicate Kansas would lose $95M in alcohol sales. This will hurt retailers, especially those near the Missouri border.
2. This will also have a negative impact on wholesalers of spirits, wine and beer who sell to those retailers.
3. It effectively raises the cost of goods sold to bars and restaurants by 8%. Raising drink prices will drive business to Missouri. This will also cause a reduction in the 10% drink tax.
4. It is a regressive tax hitting lower and middle class consumers particularly hard. A $6.99 six pack will have a tax of $1.12 or a tax of $4.48 for a case.
House Taxation Committee – Contact Amy at 785-969-1617 to submit testimony. We will help facilitate. Individuals who intend to testify must contact Lea Gerard, Committee Assistant–785-296-4830 and provide copies of testimony 24 hours in advance.
Meeting each day at 3:30 p.m. in room 346-S of the Kansas Statehouse (Click here for list of committee members.) Chair is Steven Johnson, Vice Chair Tom Phillips, and Ranking Minority Member Tom Sawyer.
Monday, January 30: Informational hearing: Sales Tax Exemptions Statutes: 3603(b), 3603(p), 3606(ee), 3606(t), 3606(hhhh), 3606(nn), 3603(s), 3606(i) (Includes Lottery tickets and advertising)
Tuesday, January 31: Public Input on Governor's proposals regarding raising cigarette tax, alcohol tax and potential motor fuel tax
Wednesday, February 1: Informational briefing: Taxation on Retirement Benefits
Thursday, February 2: Discussion on: Changes to Income Tax Rates and Glide Path to Zero
