NFIB chief fears sales tax talk

September 3, 2010
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Small business is being treated better and better by the Indiana General Assembly, says the state director of the National Federation of Independent Business, but the coming session could be tough.

Barbara Quandt noted in the group’s report from the 2010 session this week that 28 of the 100 members in the House voted with the NFIB all of the time on issues of greatest importance to the organization. That was better than last year, and she thinks the rate might climb in the coming session because legislators appear to want to help create jobs.

“We’re very fortunate in Indiana to have a legislature that by and large listens to small business,” Quandt said.

Still, she’s concerned about Statehouse chatter of extending the 7-percent state sales tax to services. That would clobber her members from two directions: Small firms would see their sales get hurt, and, because they buy lots of outsourced services, they’d also pay the tax.

“We’re going to have to be watching really, really closely,” she said.

The state is certainly desperate for revenue. What are your feelings about taxing services?
 

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  • stupid idea
    MikeSeptember 3, 2010 12:42 PM
    INDIANA FISCAL POLICY'S JOHN KETZENBERGER SHOULD BE ASHAMED FOR PUSHING THIS.
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  • Equity and Fairness
    JeffSeptember 3, 2010 1:41 PM
    Just as an income tax is more appropriate than property taxes in today's economy, so a sales tax that treats the purchases of services equally with the purchases of goods is also more appropriate to the structure of our economy, and better reflects the elements of society that put a demand on the provision of government services.
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  • BAD for IN
    Jason ShelleySeptember 3, 2010 2:42 PM
    On paper, it may look as if Indiana could raise more revenue if it starts taxing professional services. In reality, a service tax will put Indiana businesses at a huge disadvantage. Taxing professional services is a bad idea. Those in the service industry compete for jobs regularly with out-of-state companies. If Indiana companies are taxed for their work, they�ll be at a competitive disadvantage. A service tax will hurt local firms and drive away large firms with branch offices here, costing Hoosiers jobs. None of the surrounding states (Kentucky, Ohio, Michigan or Illinois) impose a tax on professional services, it will be tempting to go there for lower-cost services.

    In fact, only a handful of states across the country have such a tax. Florida, Connecticut and Michigan were forced to repeal the service tax, because the tax is difficult to manage, and did not bring the states the additional revenue windfall they had envisioned.

    If Indiana is serious about economic development ââ?¬â?? about promoting the benefits of working in Indiana and supporting Indiana companies ââ?¬â?? then state lawmakers quickly will dismiss any thoughts of taxing the service industry.
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  • New Frontier
    Big GovernmentSeptember 3, 2010 3:42 PM
    If the government is so hard up for money, why don't they tap a new cash crop (marajuana) or legalize prostitution which isn't much different than what they do with lobbyists?

    Both would provide plenty of cash and create new jobs;)
    Reply to CommentFlag Comment
  • Hey Mike
    John KetzenbergerSeptember 6, 2010 7:20 PM
    Thanks for paying attention to what they Indiana Fiscal Policy Institute has to say, but please read the report before reaching a conclusion. The report, issued last October and available at www.indianafiscal.org, analyzes the state's sales tax, puts it in perspective of the rest of the country and estimates the revenue potential if the tax was extended to more services. We even include a scenario of what the state could do with that additional revenue. Nowhere in the report, however, does the IFPI advocate for its extension. That decision is best left to the General Assembly and those who do advocate for or against an extension.
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