House speakers says tax reform package needs more study

Saturday, December 15th 2001, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ The speaker of the state House believes Gov. Frank Keating's $2.7 billion tax reform package needs more study before it is addressed in a special legislative session.

Speaker Larry Adair, D-Stilwell, said the public needs more time to learn the details of the the proposal to substitute the personal income tax with a 5.9 percent sales tax on services. Legislators also need to determine if the plan will generate enough revenue to keep state government at its current operating level, Adair said.

``There are people here in this Legislature who think you can support government without any money,'' Adair said Thursday.

Keating wants lawmakers to consider tax reform legislation in a special session in January in hopes of taking it to voters in time for it to become effective in January 2003, about the time he leaves office.

Senate President Pro Tem Stratton Taylor, D-Claremore, already has agreed to consider taking up tax reform in a special session. But unless he gets Adair's approval to bring House members back early, Keating would have to wait until the regular session starts Feb. 4.

``I don't think we should rush into this too hastily,'' Adair said. ``We need to make sure the public understands what we are going to be dealing with because there are very few people who understand what this is all about.''

Adair said another reason to wait is a legislative committee examining tax reform in a series of public forums around the state has not issued its final report.

He said Oklahomans may want services more than they want tax reform.

Keating said state revenues lost to the tax reform changes would be replaced by the 5.9 percent sales tax on services.

``What we are doing is giving every Oklahoma family a raise and an increase in purchasing power at the grocery store,'' Keating said. ``Economic freedom works, and its time to put it to work building a stronger, more prosperous Oklahoma.''

Critics of Keating's plan say what is being billed as a tax shift may turn out to be a tax reduction and an erosion of essential governmental services over time.

The state income tax amounts to 6.65 percent for couples earning more than $20,000 annually. A married couple with a household income of $40,000 would take home an extra $146 per month if the income tax were eliminated.

Keating also plans to cut the state's portion of the sales tax on groceries, which for a family with a $400 monthly grocery bill would mean an extra $18 to spend on food.

Keating also wants to repeal the business franchise tax and bring the state's estate tax in line with the federal estate tax.

Adair said offsetting the $2.7 billion in tax revenue with a sales tax on more than 200 services would pose another set of problems. He noted that hairdressers and barbers would tax their services, and parents would pay a tax on child care.

``We never before have had a tax on any of those kind of services,'' he said. ``Everybody's going to have an opinion and if they are included (in the tax) they probably will be opposed.''