A handful of members of Gov. Haley Barbour’s Tax Study Commission met with the state tax subcommittee of the House Ways and Means Committee last week to officially recommend changes to the state’s tax structure.
The Commission, whose members were appointed by Gov. Haley Barbour to study Mississippi’s tax system and search for ways to improve it, began work in January. Chaired by Jackson businessman and former head of the Mississippi Development Authority Leland Speed, the Commission issued a 23-page report that outlined what changes should be made to the tax code.
Among them are a 32¢ increase in cigarette taxes, a restructuring of the Mississippi State Tax Commission and a reduction of the inventory and franchise taxes businesses pay.
Speed said Commission’s report being finalized does not mean further evaluation of the tax code will stop.
“This is not the end of anything,” he said. “This is just the beginning of a dialogue.”
In his opening remarks to committee members, Speed singled out the excise taxes businesses pay, and called it a “tax on investment in Mississippi.” The Commission recommended reducing the tax but not eliminating it.
One tax businesses pay that could be eliminated is the inventory tax, which businesses pay once a year and whose amount is based on the total value of a company’s inventory. The Commission’s report said municipalities and counties should have the authority to reduce the inventory tax or eliminate it all together for businesses willing to locate there. Mississippi is one of a few states in the country that still collects an inventory tax.
“For the life of me I can’t understand that,” Speed said. Another change aimed at easing the tax burden on businesses is one that would exempt the first $20,000 of company’s value from ad valorem taxes and the first $10,000 in taxable income, with the remainder to be taxed at a rate of 5%. “Job creations was a major consideration when we voted on these recommendations,” Speed said.
“I firmly believe the next revolution in this country is going to be over property taxes,” said Rep. John Moore, R-Brandon.
Changes in the state’s tax code will have to be approved by the Legislature. Rep. Willie Perkins, D-Greenwood, said a reformatting of the formula used to assess the value of low-income housing “is the only one I can live with right now” out of scores of recommendations.
A popular question among committee members is what each change would do to the state’s general fund. Some would raise it. Some would lower it. But as a whole, “the entire report is revenue-neutral,” Speed said.
An area that drew a consensus was Mississippi’s small tax base. Figures indicate only 53% of Mississippi’s population pay taxes.
“That’s unfathomable,” said Rep. Credell Calhoun, D-Jackson.
Another recommendation that drew a favorable response is the Commission’s plan to restructure the State Tax Commission. Currently, a taxpayer who filed a complaint with the State Tax Commission and has the complaint denied has one recourse: to file an appeal with the same body that denied the original complaint. The Commission’s recommendation would divide the job of Commissioner of Revenue into two separate jobs: the commissioner of revenue and the executive director of the department of revenue. The executive director of the department of revenue would have statutory authority to appeal adverse decisions of the state tax commission to the court system. And to ensure taxpayers understand that these two groups are separate, the State Tax Commission’s name should be changed to the Mississippi Department of Revenue.
Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info