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Kansas Recommends Taxes that Target Internet, Digital Sales

In efforts to keep up with the technological times, Gov. Laura Kelly’s advisory council supported millions in new taxes in the digital economy. But others are concerned that Kansas should first focus on restoring fiscal health.

(TNS) — On Tuesday, the advisory council appointed by Kansas Governor Laura Kelly recommended adoption of a $32 million tax on internet sales by out-of-state businesses and the imposition of a $30 million sales tax on digital products ranging from books to cloud-based applications, magazines, video games and other items.

Former state Sen. Janice Lee and House Minority Leader Tom Sawyer proposed adjustment of state law to compel "marketplace facilitators," such as Amazon, to mandate collection and payment to the state of sales tax on third-party transactions. Kansas legislators have debated the idea, but Kansas remains one of five states without this provision in state statute.

"It's very much a fairness issue, an equity issue for our Main Street businesses," said Lee, who is co-chairwoman of the bipartisan council.

Sawyer, a Wichita Democrat, said Kansas ought to join 29 states that include in the state's retail sales tax the collection of tax on digital products. It would reflect technological changes in delivery of information through digital formats of audio-visual works, books, artwork, photographs, newspapers, magazines, video as well as online games, video games, desktop and web applications, he said.

"More and more things are going to be digital," he said. "If we don't do this our tax base is going to get small and smaller."

In addition, the council agreed to seek legislative support for a return to implementation of the local ad valorem tax reduction fund, which would help local governments restrain the growth of property taxes. The state hasn't funded the program since 2003.

The council supported the re-establishment of a food sales tax rebate program for low- and moderate-income Kansans that was deleted during the administration of Gov. Sam Brownback.

John Wilson, who leads Kansas Action for Children and previously served in the Kansas House, said the rebate could have a direct impact on hundreds of thousands of Kansans struggling with the high cost of food in a way a 1 cent reduction in the state's 6.5% sales tax on food would not.

Duane Goossen, a Topeka resident and former state budget director, convinced the council to ask the 2020 Legislature to proceed with caution on tax reform. He said the goal should be restoration of the state's fiscal health, including creation of a rainy-day fund or an end to transfer of highway dollars to the regular state budget, before embarking on comprehensive changes.

"I urge caution," he said. "Kansas has gone through a really rough financial period."

©2019 The Topeka Capital-Journal, Kan.. Distributed by Tribune Content Agency, LLC.

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