Kansas Gov. Sam Brownback is proposing to increase taxes and fees for business owners and to boost state liquor and cigarette taxes to address the state’s budget problems. The governor also outlined proposals Wednesday to continue diverting highway funds to general government programs, scale back state contributions to public employees and liquidate a state investment fund.
He also proposed selling off the state’s rights to collect its share of funds from a 1990s legal settlement with tobacco companies to raise $530 million or more.
The cigarette tax would increase by $1 a pack, to $2.29. The proposal outlined Wednesday would double the state’s liquor enforcement tax to 16 percent from 8 percent on July 1. Gov. Brownback is projecting that his proposal to boost taxes on liquor, wine and beer would raise more than $50 million a year.
Gov. Brownback did not propose repealing the income tax break for farmers and business owners. Instead, he proposed that the state reinstate personal income taxes on royalties and rents. They have been exempt under the 2012 policy that also exempts the profits of more than 330,000 farmers and business owners. Even some GOP lawmakers want to repeal the full exemption.
The Kansas Beer Wholesalers Association says the proposed alcohol tax increase prompted strong opposition from industry members and consumers.
“Kansas already has incredibly high taxes on beer, wine, and spirits,” said Jason Watkins, executive director of the association. “In fact, these high taxes are what drive business across the border to our neighboring states, especially Missouri. An additional increase on alcohol taxes in Kansas will only send more business out of state, hurting the state’s bottom line and the viability of hundreds of small businesses in Kansas.”
Watkins also expressed concern the proposed tax increase would lead to job losses within the industry.
“Kansas beer distributorships and craft beer breweries are locally owned and operated businesses that employ hundreds of Kansans, pay great wages and make tremendous contributions to their local communities through charitable giving and economic benefit,” he said.
“Doubling the tax on beer will send a large number of these people to the unemployment line and cause great harm to the communities in which our members live and serve.”
(Staff and wire reports)