Lawmakers pass tax bill; now heads to governor

UPDATE: FRANKFORT, Ky. (AP)-

7 p.m.

Kentucky lawmakers have approved a $480 million tax increase to help balance the state budget.

The Kentucky House of Representatives approved the tax plan by a vote of 51 to 44 on Monday. Nine Republicans joined the Democrats in opposing the measure.

The plan would cut income taxes on individuals and businesses while imposing new taxes on services like auto and home repairs. It would also increase the cigarette tax by 50 cents per pack.

Republican Gov. Matt Bevin has indicated he oppose the bill. But by passing the bill Monday, lawmakers preserved their right to override a veto.

Democrats opposed the bill because they said they did not have time to read it. Most Republicans argued the bill will make Kentucky’s tax code competitive with other states.

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FRANKFORT, Ky. (AP) – The latest on a tax overhaul proposal in the Kentucky legislature (all times local):

1:55 p.m.

The Kentucky Senate has approved a $480 million tax increase by voting to expand the state sales tax to a variety of services.

The Senate voted 20-18 to send the bill to the House of Representatives, which also plans to vote on the measure Monday.

Senate Democrats objected because they said they were shut out of the process and did not have time to read the bill. Republicans said the bill had to pass Monday to preserve their right to overturn any vetoes from Republican Gov. Matt Bevin.

The bill would impose the state’s 6 percent sales tax on services including automotive repair and pet care for small animals. Kentucky residents would pay 5 percent of their taxable income to the state, down from 5.8 percent and 6 percent for most earners.

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11 a.m.

Many Kentucky residents would pay less in state income taxes under a proposal moving through the state legislature.

A deal announced Monday by Republican leaders would impose a 5 percent income tax rate for Kentucky residents. It would replace the current tax structure, which has a top bracket of 6 percent and various brackets below that.

Republican Senate President Robert Stivers says most people pay 6 percent because people in the lower brackets don’t make enough money to pay taxes. But Jason Bailey with the Kentucky Center for Economic Policy says some people just above the poverty line would likely pay more.

The change would result in $114 million less revenue for the state, to be offset by an expanded sales tax on some services.

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10:47 a.m.

Kentucky lawmakers have reached a deal to charge sales taxes on some services as part of an overhaul of the state’s tax code to generate an extra $480 million over the next two years.

Lawmakers approved the plan Monday as part of a conference committee. But the plan must still survive votes in the Republican-controlled Senate and House of Representatives later in the day.

Kentucky residents would pay a 6 percent sales tax on services including landscaping, janitorial, pet care for small animals, golf courses and country clubs, dry cleaning and fitness and recreational sports centers. They would also pay sales taxes on repair and installation services, which would include auto repairs.

Democrats say they were excluded from the process.