February 26, 2009
JACKSON -- The state Senate Wednesday approved an inventory tax reduction for businesses, which have been pushing heavily for this.
"Businesses are asking for help, and I think we should give them some help," said Senate President Pro Tem Billy Hewes, R-Gulfport, chief sponsor of the bill.
However, Senate Bill 3272 says the state must pull out of its recession and see overall tax collections grow before the inventory tax cut would take effect in a five-year phase-in period. And, to prevent the $70 million revenue loss this would cause for cities and counties, the state would give them rebates to make up the difference.
Mississippi is one of the few states that impose a local property tax on goods held for manufacturing, resale or other purposes, according to Gov. Haley Barbour''s Tax Study Commission.
The commission has recommended that local governments be authorized to exempt all raw materials and finished goods from the property tax.
The Senate voted 36-13 for the bill cutting in half the inventory tax conditioned on the economy improving and state-funded rebates being provided to cities and counties for the revenue loss.
However, it''s uncertain if the House will approve the legislation.
"I don''t know how that''s going to roll," said House Democratic Leader Tyrone Ellis, D-Starkville. "We''ve already got tax exemptions everywhere."
Ellis sits on the House Ways and Means Committee, which has declined so far to take up legislation to reduce the business-inventory tax.
The House, however, did approve a bill Wednesday to exempt clothes from sales taxes in the last weekend in July each year. This sales tax holiday is aimed largely at giving relief to parents buying clothes for their children as the school year starts.
The House voted 118-3 for the tax holiday bill, which in the past two years has died in the Senate.
The House also voted to let cities create entertainment districts that would enable them to impose special sales taxes at hotels and restaurants to help generate funds for tourism-related developments.
Senate Bill 3272 to reduce the state inventory tax:
- Terry Brown, R-Columbus: For
- Gary Jackson, R-Kilmichael: For
- Bennie Turner, D-West Point: Against
- Hob Bryan, D-Amory: Not voting
- Sampson Jackson, D-Preston: Against