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News - Tax Advisory Committee discusses state tax reform

  • July 23, 2012

Kentucky Farm Bureau’s (KFB) Tax Advisory Committee met in Louisville in mid-July, reinforcing the organization’s stance on two key state tax issues. The committee agreed that the organization should continue to urge Kentucky legislators to maintain the current annual cap on state revenue generated from real property taxes and that Kentucky’s sales tax exemptions for production agriculture should be maintained.

During the meeting, Lieutenant Governor Jerry Abramson also gave an update on the progress made by the Governor’s Blue Ribbon Commission on Tax Reform and sought feedback from the KFB Tax Advisory Committee members.
“We stand ready to work with the governor’s tax commission and the general assembly to identify broad-based taxing mechanisms that will help address Kentucky’s revenue situation,” said Pat Henderson, Chair of the KFB Tax Advisory Committee. “However, maintaining Kentucky’s sales tax exemptions for production agriculture and limiting state property tax revenue have long been priority issues of our organization. Our membership realizes that many farmers and landowners simply cannot survive an increased tax burden.”
KFB supports the current provisions of House Bill 44 (KRS 132.010), advocating that revenue from property taxes should continue to be limited to 4 percent plus new growth. KFB also believes that any proposals to exceed 4 percent should automatically be determined by Kentucky voters.
“As a farmer, I am opposed to freezing the state tax rate. The members of this committee want to caution that implementing a rate freeze does not freeze property taxes,” said Henderson. “Locking in the tax rate would allow tax bills to rise beyond four percent per year, as property values increase. A property tax rate freeze would affect every property owner in this Commonwealth, not just those in rural Kentucky.”
The KFB Tax Advisory Committee also reemphasized the need to maintain the state’s sales tax exemptions for production agriculture.
“Removing sales tax exemptions for agriculture places an immediate six percent increase in the cost of production for Kentucky’s farmers,” explained Henderson. “It would also devastate our agri-businesses, because all of our surrounding states have some form of agricultural exemption from sales tax.”
As all seven of Kentucky’s neighboring states already have agricultural sales tax exemptions in place, eliminating Kentucky’s exemption places its farmers at an economic disadvantage that could have dramatic impacts on the entire agricultural industry.
KFB’s board of directors will consider these taxation issues and several other topics when it votes in December to establish state legislative priority issues for 2013. Both tax issues were adopted as priorities for the 2012 legislative session.

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