Kansas Senate Passes Tax Increase

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Kansas Senate Passes Tax Increase

TOPEKA, Kan. -- The Senate voted to increase taxes by $294 million, which raises cigarette, liquor and inheritance taxes

Supporters of the bill, which passed 22-19, said the tax hikes are necessary to plug a $290-million hole in the $4.4-billion state budget for the fiscal year that begins July 1. "I don't think that anyone is pleased by what we had to do, but we had to balance the books," said Sen. Lynn Jenkins (R-Topeka), who earlier in the session said she couldn't support a sales-tax increase. "We all had to give," she said, explaining her change of heart, according to the Topeka Capital-Journal.

Under the bill, the state sales tax would increase to 5.3 percent on June 1 from the current 4.9 percent. But lawmakers, assuming that the state's economy will begin to recover in the fall, voted to repeal most of the increase in stages.

The tax would drop to 5.2 percent in June 2004 and to 5 percent in June 2005.The bill increases the excise tax on cigarettes by 76 cents, taking the per-pack tax to $1 from 24 cents, the report said.

Opponents of increasing the tax said it would harm Kansas businesses that sell cigarettes in communities that border other states. "There won't be any sales of cigarettes by the carton in Liberal, Kansas," said Sen. Tim Huelskamp (R-Fowler), explaining that the town is just a few miles from the Oklahoma border. "This just seems almost insane to me."

Other critics questioned whether the increase might cause so many people to quit smoking that the tax increase wouldn't raise the $137 million it is expected to generate on an annual basis.

The tax measure also raises gallonage taxes charged at the wholesale level on beer, wine and liquor. Those increases would generate around $7 million a year. In addition, the tax package also partially restores the state inheritance tax. Spouses and direct descendents still wouldn't pay state taxes on portions of estates they inherit, but more distant relatives - such as nieces and nephews - would.

Kansas Tax Increase Package at a Glance
The tax increase approved by the Kansas Senate would:
* Increase the state sales tax from 4.9 cents per dollar to 5.3 cents per dollar. The tax would decrease to 5.2 cents in June 2004 and to 5 cents in June 2005, where it would stay.
* Reimpose the inheritance tax on distant relatives.
* Increase the state tax on cigarettes by 76 cents, from 24 cents per pack to $1 per pack.
* Increase a wide range of liquor and beer taxes.