April 1, 2016 10:46:26 AM
JACKSON -- Mississippi legislative leaders are considering raising sales tax rates from 7 percent to 9 percent as part of plan to increase road and bridge funding. But they indicated they might remove the sales tax from groceries.
House Transportation Committee Chairman Charles Busby, R-Pascagoula, confirmed he's examining a sales tax increase among other options but wouldn't provide further details. He had said he hoped to introduce his proposal Thursday, but the House ended the day without the Transportation Committee meeting, following an afternoon of closed-door discussions.
Senate Transportation Committee Chairman Willie Simmons, D-Cleveland, said Busby laid out a House plan to him including the sales tax increase to 9 percent. Some estimates say it would cost $400 million to remove the tax on groceries, but raising sales taxes by 2 percentage points could raise $800 million in other revenues.
Simmons said the House plan also calls for removing the current 18-cent-per-gallon tax on gasoline and diesel and replacing it with a 10 percent sales tax. The fuel tax would have a floor of at least 20 cents per gallon, but a ceiling of no more than 30 cents. That means taxes would rise with fuel prices, but would stop going up after gasoline hit $3 a gallon.
Russ Latino, who leads Mississippi's chapter of Americans for Prosperity, said the plan could include some of the cuts included in a $575 million-a-year tax reduction bill that the Senate approved earlier.
Latino said the plan includes eliminating the $260-million-a-year business franchise tax, as well as eliminating the 3 percent income tax bracket, which would reduce taxes by $145 million a year. However, Latino said lawmakers have also told him that the plan could include increases in corporate income taxes.
Simmons said he'd consider the House plan, but was noncommittal. He had proposed his own $441 million-a-year plan, which mainly relied on raising fuel taxes and license fees. The Senate instead passed a placeholder bill with no changes, raising the chance that no plan would be made public until after House-Senate negotiations.
It's unclear how much additional revenue, if any, the House options would raise. Some officials favor a tax shift that would raise more for roads, but cut taxes by as much or more elsewhere. Latino's conservative advocacy group has been organizing opposition and met with more than 15 House members Wednesday.
"I think there are a lot of people who are concerned about the potential of raising taxes in the first year of a Republican supermajority just months after they were elected promising to keep government small and taxes low," Latino said.
Because both chambers will need a 60 percent supermajority to pass any package, support from House Democrats could be required for passage.
Democrats released their own plan Wednesday, calling for reducing some business tax exemptions received by businesses and setting aside 1 percent of state revenue per year out of the General Fund, the main pot of money in the state budget.
"Instead of increasing the burden on users, we think it can be done in a better way by taking back some of this corporate welfare," said House Minority Leader David Baria, D-Bay St. Louis.
Rep. Robert Johnson, D-Natchez, said House Democrats oppose the total removal of the sales tax on groceries because it could cut into small towns' sales tax revenue.
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