Louisville Metro Councilman Ken Fleming, R-7, is sponsoring a $25,000 study on the economic impact of raising the state sales tax in the city.
Mayor Greg Fischer has been lobbying residents and state lawmakers to support a local option sales tax to raise revenue for special projects.
The plan would allow local voters to accept or reject raising the sales tax, which proponents say could generate around $90 million annually.
But Fleming says the city hasn’t examined its current tax structure and officials don’t know how an increase would burden residents.
“We really don’t have a benchmark or a good analysis on the taxes and how it affects individuals, and this study I’m anticipating will gives us a clear understanding of the tax implications. It can be used for future analysis or reviews of any type of taxes that might come up,” he says.
Funding for the sales tax study is coming from Fleming’s discretionary account and will be spent to hire the University of Louisville Research Foundation Inc. to examine the impact.
A recent survey showed 72 percent of Kentucky voters favor amending the state constitution to allow for a local option sales tax, but leaders from both parties in the General Assembly have recoiled from the idea.
“I’ve been talking to legislators in Frankfort along with other mayors and county judges from around the state to show them that there is in fact strong support at the grassroots level and we hope Frankfort will be listening to the people,” Fischer told WFPL last month.
The Fischer administration is hoping to make a bigger push in the 2014 legislative session, but has considered raising private dollars to fund a similar study. Fischer has argued the tool wouldn’t necessarily raise taxes, but would simply give voters the choice.
Fleming says it’s important city officials have more information before next year’s session to back up their support or opposition to the idea.
“I just don’t think this one percent additional tax is really the way to go, but I want to see the data and how it’s affecting individuals,” he says. “And starting it now will provide us enough analysis, and questions and a public debate as far as where we need to go and how we need to go about doing things.”
The ordinance to fund the study is expected to pass the full council this Thursday.