February 21, 2006

Kansas: Investing in The Future and Paying More to Golf?

In recent years, Kansas has struggling with how to respond to a Supreme Court ruling which said that the state needs to commit millions more dollars to fund public education adequately. For the past month or so, legislators and the Governor have met behind closed doors to figure out a way to meet students' needs.

While these discussions continue, there's some other promising debate in the Kansas House of Representatives. The debate in the House Tax Committee is about broadening the sales tax base to include green fees for golfers who play on city or county golf courses. Adding an additional tax on these green fees could bring in an estimated $10.9 million in revenue for the state.

Not only would expanding the tax base to include services like green fees bring more money into the state, but adding services to the sales tax base would play a big role in modernizing the Kansas tax structure. It's a widely known fact that the country's economy is changing from a goods to a service based economy. Governments that rely on sales taxes collected on goods are seeing their tax base narrow, and revenues will eventually fall, as well.

The Institute on Taxation and Economic Policy has written on this subject in this policy brief: "Should Sales Taxes Apply to Services?" Policymakers across the country are seeing the need to tax more services-- and at a time when Kansas lawmakers are being forced to raise revenue, taxing selected services is a good place to look.


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