Legislative Agenda: How to revamp Kentucky's taxes

FRANKFORT, Ky. (WKYT) - When lawmakers convene the new legislative session on Tuesday, they're looking at reforming the state's tax code that would include lowering income taxes, raising the cigarette tax, and expanding the sales tax.

A group appointed by the governor recommended changes to the tax code that would generate about $690 million a year in additional revenue.

In December, Lt. Gov. Jerry Abramson said the changes recommended by the Governor's Blue Ribbon Commission on Tax Reform would make Kentucky more competitive in creating jobs. The proposal would lower the state's top corporate tax rate to 5.8 percent from 6 percent.

While individual income tax rates also would drop, consumers would face some increases or expanded taxes.

•Require all companies to collect sales tax on goods shipped to Kentucky addresses.

•The state's cigarette tax would go to $1 a pack from the current 60 cents.

•Impose a gross receipts tax of 1 percent on both residential and business utilities.

•Amend the Kentucky Constitution to allow a local general sales tax.

"Kentucky has not substantially changed its tax code in decades even though the economy has changed," said WKYT political editor Bill Bryant. "But change isn't easy. And when you start talking about what taxes are raised and which are lowered, it could get dicey."

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