/Democrats Halt franchise tax cut to pay for highways

Democrats Halt franchise tax cut to pay for highways

Sen. Sollie Norwood stated, “We need revenue we can direct towards all Mississippians without reducing other services or tax increases for citizens.” Sens. Angela Turner from West Point, Hob Bryan (Amory) and David Blount (Jackson) made the proposal. They noted that the franchise tax cut had not yet taken effect and it would still be possible to finance roads and bridges without increasing taxes. Bryan stated that without general fund revenue, we won’t be able maintain roads and bridges. “Generally speaking, gasoline tax has been the way the highway department has been paid, but that is no feasible way to finance roads in the future.” Blount stated. Blount stated that there are many studies being done on our tax system. “Here’s six and a quarter billion dollars over the next twenty years without raising Mississippians’ taxes or Mississippi businesses.” We believe in fair tax rates for Mississippians of middle income. We believe this is an essential and necessary first step to address our infrastructure requirements.” Republican legislative leaders supported ending the franchise tax to promote economic development in the state. According to the Department of Revenue, the current state franchise tax in Mississippi is $2.50 per $1,000 of capital employed. The assessed property values for Mississippi are the greater. The tax cut would exempt the first $100,000 of taxable capital from 2018 onwards. The tax rate will be cut by 25 cents each year starting in 2019. This would continue until 2028 when the tax will be completely repealed. Lt. Governor appointed legislative study committees. Hearings have been held by Tate Reeves (R-Florence) and House Speaker Philip Gunn (R-Clinton) to examine state spending and taxing. According to the legislative leaders, tax cuts that were enacted in spring are being reviewed. They have however spoken about the franchise tax cut as a way to enact that cut sooner than 2018. This is the current goal in the law passed this Spring. A consultant outside of tax advised the committees to repeal franchise tax sooner. A statement by Lt. Governor. Lt. Gov. Laura Hipp stated that Tate Reeves’s office believes that raising taxes on Mississippians’ incomes or employers’ investments in the state will hinder long-term economic growth. House Speaker Philip Gunn did not immediately comment. Bryan pointed out that the first step in pursuing repeal of the franchise tax reduction is to build a legislative coalition. Bryan stated that the tax cut took a huge amount of money from the general fund. Bryan said that if you took the same amount of money and put it into a separate fund, you could make huge strides in fixing roads, streets and highways. It could have a significant impact on Mississippi’s transportation infrastructure.” Bryan stated that the franchise tax cut was a political decision. Bryan explained, “If you took that same amount of money and put it in a fund by itself, you could make enormous strides in repairing the highways and municipal streets in Mississippi.” Bryan also said that they would not be able to determine how franchise tax funds would go to bridge and highway construction. There is currently no mechanism for general funds to be taken from the general fund. The Department of Transportation is an agency of the special fund. The Legislature may appropriate funds to the department but all money comes from federal and fuel tax revenue as well as various fees. Some funds are also received by the agency through bonds sales for construction. Four years of studies have evaluated the need for infrastructure investment, efficiency of the Department of Transportation, and recommended additional funding for highway projects. Senators identified highway infrastructure improvement as a key issue for the next legislative session. Turner stated that “We know that the condition of our infrastructures is critical” and “it is only getting more serious.” Turner added, “But then we find ourselves now, with this huge tax cut, a need for roads, bridges, and other forms (infrastructure) repairs.” Turner stated that it was irresponsible to let this law stand. “To allow this tax reduction to be implemented years later without a financial plan to ensure that those services are available to us all is irresponsible.”