Sales Tax Bill Would End Exemptions

Feb 27, 2016

The House Finance Committee has approved a bill that would close loopholes in the state's sales tax.

As the bill was introduced, House Bill 2704 would have increased the state's consumer sales tax from 6 to 7 percent as a way to generate new revenues for the state. But in Committee Saturday, the bill took a new form.

“We had a committee substitute that basically took that bill, and we broadened the base, so we added a number of categories that currently aren’t subject to sales tax,” said House Finance Chairman Eric Nelson.

Nelson says by instating a sales tax on exempt industries, like legal, accounting and engineering services, the state can actually reduce its tax rate and still bring in an additional revenue.

The committee version of the bill would reduce the sales tax to 5 percent on January 1, 2017, bringing in an additional $70 million that calendar year. After that, the bill proposes continuing to reduce the sales tax, aiming to reach 4.75 percent by January 1, 2020.

Nelson expects the bill to be up for a vote in the House on Tuesday.