By Jeremy D. Wells
Carter County Times
Governor Andy Beshear has signed an executive order providing vehicle tax relief for the next year, and is also suggesting a temporary drop in state sales tax – by one percent.
The governor issued a release last week noting that while Kentucky was experiencing “record-breaking investments and job creation across the commonwealth” with “the best budget outlook in 25 years,” families and small businesses continue to struggle. That includes, the governor noted, “having to pay more for daily essentials… goods, and services.”
“While this challenge is temporary, inflation has reached a 40-year high – directly due to the effects of a once-in-100-years pandemic that has stretched on for nearly two years,” Beshear wrote. “It is tougher for our families to get by, and it threatens our small businesses if people can’t afford to buy what they’re selling.”
Because of this, the governor is pushing at least two tax relief efforts.
The first is an immediate change to vehicle taxes that the governor said should save Kentucky families up to $340 million. That executive order freezes automobile property tax rates at last year’s rate – putting a stop to an expected 40 percent increase related to rising used car values as the supply chain has stalled.
“In simple terms,” the governor wrote, “under this order, Kentuckians will pay an amount similar to last year if they own the same vehicle in the same condition and are living in the same county,” rather than paying taxes on the inflated value.
Those who have already paid their 2022 automobile taxes should expect a refund, the governor added.
While Kentucky law restricts the exemption of vehicle taxes to the general assembly, the Kentucky Senate passed a rare joint resolution granting the governor those powers last month.
Those freezes on increasing automobile taxes will remain in effect for the next two years.
The other action the governor is advocating for is a one percent decrease in sales tax.
His administration, he said, is working with House Democrats to file legislation to temporarily cut the state sales tax from six percent to five percent through June of 2023.
“This historic sales tax cut will help families until the high U.S. annual inflation rate retreats, which experts predict will fall back to around the two percent range by the end of 2022,” he wrote.
A reduction in sales tax could decrease tax costs for Kentucky families by as much as 16 percent or more, he said.
“We are talking about savings on purchases at retailers and restaurants; on building materials and hardware… on clothing… (and) at grocery stores,” for purchases that are not already tax-free. Food and medicine purchases from grocery stores are already tax-free.
“If we are going to alter our tax structure, let’s do it to address current inflation and in a way that will help out all of our families, regardless of their wealth,” Beshear said. “Let’s do it in a way that will make things cost less and help everyone’s dollar go further.”
Contact the writer at editor@cartercountytimes.com
