LOUISVILLE, Ky. (WDRB) — Starting Sunday, Kentuckians will see a sales tax on more than three dozen new goods and services.
Although residents will pay less income tax in 2023, many things are now included in the current 6% sales tax to make up for the loss in state revenue.
House Bill 8 It was passed earlier this year and lowered the state’s income tax from 5% to 4.5%. For a person earning $60,000, they currently pay $3,000 in state income tax. At the new 4.5 percent rate, the same person would pay $2,700.
Lawmakers then decided to include dozens of different new services in the state’s existing 6% sales tax. Some of these industries that are now being taxed include rides like Uber or Lyft, valet parking services, recreational sports, rental space for weddings, and more. includes.
Below is a complete list of future services subject to 6% sales tax:
- Photography and photo finishing
- Marketing
- telemarketing
- Public opinion and research survey
- Lobbying
- Recruitment of executive staff
- Website design and development
- Website hosting
- Fax transmission
- Private mail room
- Security services
- Security system monitoring
- Private investigation services
- Process server services
- Redemption of personal property
- Private background check services
- Parking services
- Road and travel services
- Condo time-share exchange services
- Short-term apartment rental
- Planning and coordination of social events
- Recreation, recreation and athletic instruction services
- Camp tuition and fees
- Personal fitness training
- Massage (non-medical)
- Aesthetic surgery
- Body modification (piercing, tattoo)
- Testing services
- Interior decoration and design
- Household relocation
- custom design (fashion)
- Lapidary services
- Labor and services for commercial refrigeration
- Labor for the repair or replacement of clothing, shoes, watches or jewelry
- Access services to pre-written computer software
Find more detailed definitions of each category from the Kentucky Department of Revenue, here and here.
Budget Chairman of the Senate Sen. Chris McDaniel said he understands it’s a lot to digest, but the sales tax expansion is meant to help reduce Kentucky’s income taxes.
“This is not a dramatic expansion of the sales tax,” said McDaniel, a Republican. “We tax consumption, not production. And we believe that when Kentuckians earn money, those individuals make the best decisions about how to spend that money. (People) choose how they want. They can’t sit hundreds of miles away in Frankfort and spend the money. spend that money rather than choose.”
However, I admit that this will not fully compensate for the loss.
“Ultimately, we’ve put a lot of effort into making sure it doesn’t create a big hole in the Commonwealth budget, and there are a lot of layers of checks and balances to make sure it doesn’t do that beforehand,” he said.
Meanwhile, the Kentucky Center for Economic Policy is sounding the alarm.
“Basically what’s happening here is there’s a big hole in the budget,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy.
Bailey said the tax change hurts the poor and helps the rich.
“It’s really skewed to the very, very wealthy, and part of the problem is that those revenues are going toward our schools, our health care system, our infrastructure and other needs,” he said.
But McDaniel disagrees.
“Their revenue advantage is being spent in tax-exempt areas and will remain tax-exempt, and those same people, you know, will have more money in their pockets,” McDaniel said. “So it’s just a straw man argument.”
At the same time, some nuances in the law, especially around utility taxes for non-primary residential areas, still remain unanswered questions.
“Confusion about how it’s played is always a problem,” Kentucky host Kyle Noltemeyer said. “No one is ever quite sure and then they find out and have to go back, hence the whole mess.”
The tax will apply to water, gas and electricity for additional properties such as rental units or apartments that you may rent out. It also starts in January. 1, but there is some exceptions.
“The point is, if it’s a place where you live, you’re not taxed for those utilities,” he said. Jason Nemes, R-D33, said.
When WDRB News requested an interview with the State Department of Revenue earlier this month about the changes, we FAQ page then to the lawmakers who wrote the tax change.
McDaniel said he hopes Kentuckians will adapt to the changes, even though it will require several payment cycles.
“The average Kentuckian will see nothing from this change, but they will have a few more dollars in their pocket each week that they can choose how to spend,” he said.
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