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Minutes for HB2685 - Committee on Taxation
Short Title
Imposing sales tax on digital property and subscription services.
Minutes Content for Wed, Mar 4, 2020
Chairperson Johnson opened the hearing and recognized Kathleen Smith, Kansas Department of Revenue, who provided information on the fiscal note for HB2685. She stated the bill would require $200,327 from the State General Fund in FY2021 for three positions and to modify the sales tax system.
Proponent:
Trey Cocking, League of Kansas Municipalities testified for HB2685 stating the bill would lower property taxes, create a revenue stream that is important to cities, and brings fairness to mainstreet businesses. Brick and mortar sellers are at a 7% to 10% price disadvantage compared to online sellers (Attachment 3).
Opponents:
Eric Stafford, Kansas Chamber, testified for HB2685 stating the Tax Foundation and Urban Institute does not support broadening the tax base by itself. A report released by the Tax Foundation recommended broadening the sales tax base as one way to generate revenue to lower rates. HB2685 requires sales taxes to be collected on the sales of digital goods and streaming subscription services that broadens the tax base without any off-setting rate reduction. He stated Kansas has the 8th highest state and local sales tax in the nation (Attachment 4).
Michael Austin, Kansas Policy Institute, testified for HB2685 stating the bill is not revenue neutral but is a tax increase. The bill broadens the base without lowering the rate. He noted in 2015 the State raised sales taxes; in 2017, the state raised income taxes; in 2018, income taxes were raised again; in 2019 income and sales taxes were raised. If HB2685 is passed, it will be the fifth straight year of tax hikes on Kansans (Attachment 5).
Elizabeth Moe Garcia, CompTIA, The IT Industry Trade Association, presented written testimony for HB2685 (Attachment 6).
Chairperson Johnson thanked the conferees for their testimony and closed the hearing on HB2685.
