(The Center Square) – Gov. Laura Kelly’s latest budget presentation includes a proposal that would implement digital sales taxes on streaming services and online shopping.
Streaming services, including Netflix and Hulu, and online marketplace enablers like Etsy and Ebay, would apply Kansas state sales tax to their transactions.
“For the past 15 years, high street retailers have been faced with a place of competition where their competitor has the advantage of not paying state income tax, property tax, or state tax on goods. sales, “Trey Cocking, deputy director of the League of Kansas Municipalities, told The Center Square. “We think this puts everyone on an equal footing and allows high street businesses to not even have an advantage, but at least it makes them competitive.”
Not everyone agrees with the proposal.
“You don’t level the playing field between companies by making a group of companies worse off,” Michael Austin, director of the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute, told The Center Square. “Raising taxes on broadcasting services when many Kansans are stuck at home due to job loss or business closure is effectively kicking out Kansans while they are down.”
Cocking said the proposal will have a positive impact on the state’s economy because the money stays in the community and can be used to pay a police officer’s salary or to fix a pothole, for example.
Austin said the rule would have a reverse impact on local entrepreneurs.
“Small businesses are already negatively affected by tax compliance costs,” Austin said. “Adding more taxes to your burden amid a COVID recession is the furthest thing from beneficial impact on the Kansas economy.”
A combined digital sales tax and a state sales tax on out-of-state transactions are estimated to generate more than $ 85 million for the state.
“The real tax burden on the government is not how much it taxes, but how much it spends,” Austin said. “If this sales tax increase is approved, Kansans will be in a rush to financially support a record $ 8 billion budget.”