SJR 30 Eliminates income taxes and replaces them with an expanded sales and use tax
Sponsor: Koenig Co-Sponsor(s)
LR Number: 4490S.04I Fiscal Notes
Committee: Ways and Means
Last Action: 1/18/2018 - Second Read and Referred S Ways and Means Committee Journal Page: S166
Title: Calendar Position:
Effective Date: Upon Voter Approval

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Current Bill Summary

SJR 30 - This constitutional amendment, if approved by the voters, phases out the individual income tax and modifies the sales tax law. From January 1, 2020 to December 31, 2021, the individual income tax shall be capped at three percent. For all tax years beginning January 1, 2022, the individual income tax shall be eliminated and the General Assembly and all taxing jurisdictions shall be prohibited from imposing a tax measured by income or earnings, except for such a law that was lawfully enacted by a city prior to January 1, 2019, and continues to be renewed by the voters of such city. However, such tax shall not be increased or restored if such tax is reduced or repealed by the voters of the city. (Sections 1(a), 1(b), 1(c))

Beginning January 1, 2020, this amendment repeals all state sales taxes and exemptions thereto other than taxes on alcohol, aviation fuel, insurance products, tobacco, and any constitutionally authorized sales tax. From January 1, 2020 to December 31, 2021, the state sales tax shall be imposed on all sales and services, other than those exempted by the amendment, at a rate not to exceed five percent. Beginning January 1, 2022, the total of the state sales tax, conservation sales tax, and the parks and soils sales tax shall not exceed eight percent.

The tax revenue from the sales tax imposed by this amendment shall be deposited into the General Revenue Fund and appropriated by the General Assembly unless otherwise restricted by the Constitution, except that a portion of the funds received shall be deposited into the School District Trust Fund. The amount deposited in such fund shall not be less than the average annual amount deposited in the fund for fiscal years 2014-2018. (Section 1(e))

The state sales tax imposed by this amendment shall be on all retail sales of new tangible personal property and all services. All existing sales tax exemptions are repealed as of January 1, 2020. The only sales tax exemptions authorized shall be those specifically listed in the amendment or those passed by a two-thirds majority of both houses of the General Assembly. (Section 1(f))

The General Assembly shall be required to enact a law by January 1, 2022, to provide for the partial relief of sales tax liability. Taxpayers with an income at or below the maximum income threshold, as defined in the act, shall be eligible for such relief. For such taxpayers, an annual exemption shall be provided in an amount not to exceed the product of the prebate amount, as defined in the act, multiplied by the combined state sales tax rate. Such exemption shall be remitted to the eligible taxpayer in a manner to be fixed by law. The General Assembly may extend such relief to taxpayers with an income in excess of the maximum income threshold. (Section 1(i))

Beginning January 1, 2020, all provisions of law, ordinances, or resolutions exempting sales and services from local sales taxes, other than those exempted by this amendment, and all provisions establishing the rate of tax on such sales and services, shall be void. A new rate, to be calculated by the Department of Revenue, shall be imposed to produce substantially the same amount of revenue that was produced by the prior rate of the tax on average in the five years prior to January 1, 2020. The General Assembly shall provide a process to allow taxpayers and local taxing jurisdictions the opportunity to appeal the recalculation of the tax rate, provided that such appeal is filed by January 1, 2022. The rate recalculation under this section shall be subject to review and verification by the State Treasurer, and the Treasurer may request a recalculation of such rate. (Section 1(j))

The General Assembly may enact a law by January 1, 2022, to provide a mechanism for the continuation of any property tax relief that is available in the form of an income tax credit for the tax year beginning on January 1, 2018. (Section 1(c))

This amendment is substantially similar to SJR 13 (2017), SJR 25 (2016), and SJR 11 (2015), and is similar to SJR 46 (2014), HJR 80 (2014), and HJR 25 (2013).