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Brownback wants $378 million tax increase to fix Kansas' budget woes

Bryan Lowry, The Wichita Eagle on

Published in News & Features

TOPEKA, Kan. -- Kansas Gov. Sam Brownback wants to double the tax on alcohol and hike the tax on cigarettes by a dollar to help fill a budget shortfall.

The Republican governor is also proposing liquidating a long-term investment fund and selling off the state's future proceeds from a settlement with the tobacco companies to get cash now in the face of the more than $900 million budget shortfall the state faces for the next 18 months.

Brownback's budget director, Shawn Sullivan, unveiled the governor's tax and budget proposals to lawmakers Wednesday morning.

The governor wants to increase taxes by $377.7 million over two years.

That includes doubling the tax on liquor in July from 8 percent to 16 percent, which would bring in about $107 million over two years, and increasing the tax on cigarettes from $1.29 a pack to $2.29 to bring in an additional $88.5 million over two years.

The governor would also double the tax rate on other tobacco products from 10 percent to 20 percent for an additional $14 million over two years.

Brownback offered a small compromise on his signature business income tax exemption. The governor would preserve the exemption for limited liability companies, S corporations and other closely held businesses, but he proposed taxing income from rents and royalties, which is currently exempt under the law.

The tax would go into effect in next January.

Repealing the exemption in its entirety would bring in about $250 million, according to House Tax chairman Rep. Steve Johnson, a Republican from Assaria.

Brownback also proposed increasing the annual filing fee for for-profit entities from $40 to $200, which would bring in about $33.6 million a year. Business owners would pay the fee regardless of the size of their business.

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