Another Tax… Coming to a Town near You?

The Kentucky State Senate is poised to consider a new tax that will reportedly put a half a billion dollars in the coffers of county and city governments across this commonwealth.

Interestingly this new tax is not being portrayed as a tax at all, but is being called a “choice” by the proponents which include many Republicans who supposedly don’t like new taxes. They portray this tax as a “choice” because they’ve been sold on the idea that local voters get to choose to tax themselves in order to pay for projects in their own communities.

But the only way that could be true is if the vote was conducted at the cash register. The reality is that many customers will end up paying for projects they didn’t vote for and don’t get to use. If you live out in the county and it’s the city levying the tax, you will not get to vote. Likewise, nor will voters in rural communities that go to bigger cities to shop have any say; they will only get to pay.

From a retail standpoint, this approach causes several concerns. The first is that adding a local sales tax to different localities across the state creates a collection nightmare for the retailer. Keeping up with different taxing rates between different cities and counties is going to be problematic for those folks who deliver goods, not to mention putting retailers at a competitive disadvantage with their neighboring retail shops in the next county over with a different sales tax rate. Raising the complexity of the taxing structure eventually raises consumer prices in the end.

We also know that sales taxes are transient in nature and consumers soon learn to avoid higher taxing districts in order to save a dollar or two. You only have to look at the increase in online shopping in recent years or the success of a sales tax holiday in Tennessee and other states to see that.

This new tax increase will cost retailers and other businesses as well as major manufacturers that Kentucky sorely needs, in increased energy costs because, unlike residential users, the commercial businesses pay sales tax on utilities. A one percent hike in utility rates could be staggering to big users in this state. Businesses also pay sales tax on many goods and supplies they buy to run their business. As a matter of fact, business-to-business sales bring in one-third of the state’s sales tax revenue every year.

The amount of money this new tax will raise is staggering, over $500 million dollars each year. Kentucky businesses will end up paying for one-third or $165 million of this new tax and consumers will shoulder the rest. Taking a half a billion dollars out of the economy is not without negative consequences on the commonwealth’s tax revenue, consumer spending, and future business expansion (new jobs).

Contact your senator today and ask that they vote NO on HB1 by clicking HERE.

Kentucky Retail Industry Shows Signs of Improvement

Results from KRF Retail Industry Fall Economic Survey Released

The outlook of Kentucky retailers appears to be slowly improving as the winter holiday shopping season approaches. According to the Kentucky Retail Federation’s latest fall economic survey results, 70 percent of respondents believe their businesses are in either the same or better financial shape than at the same time in 2013.

“This number has been slowly getting better over the last two years,” Tod Griffin, KRF president said “Maybe the retail sector is finally starting to respond to an improving economy.”

Sixty-three percent of respondents indicated their year-to-date sales are equal to or exceeding those of 2013 at this time. However, the cost of goods sold continues to put the squeeze on retailers and yet a small percentage of respondents reported passing the cost onto consumers.

Tax policies, health care costs and a potential increase in the minimum wage were noted as the top three factors currently hindering retail business growth. Consumer confidence was still a top concern on retailers’ ability to grow their business as only 17 percent of respondents believe consumer confidence has increased since June 1.

Kentucky’s retail workforce appears to be stabilizing. Over 60 percent of respondents indicated both their full-time and part-time workforce is staying the same this year with no big changes expected in winter holiday season hiring. For those employers looking to hire though, they are still having a hard time finding qualified applicants with a strong work ethic.

When asked about the coming holiday shopping season, a majority of members planned for the same seasonal inventory as 2013 anticipating equal sales. The vast majority of respondents do not plan to increase store hours during the holidays.

“It looks like the holidays are expected to be solid judging by the responses to this fall’s survey,” said Griffin. “Kentucky’s retail industry is beginning to show signs of improvement.”