SALES tax cuts dead this year

Tuesday, May 22nd 2001, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Proposals to eliminate the sales tax on groceries and to give Oklahomans a sales tax holiday on back-to-school clothing appear to be dead.

A $46.3 million tax cut plan unveiled by Gov. Frank Keating and legislative leaders last week does not include the sales tax plans. Lawmakers said Monday it is unlikely they will be considered before the Legislature must adjourn on Friday.

``We feel it's not going far enough and it's a slap in the face of Oklahoma taxpayers,'' said Rep. John Sullivan, R-Tulsa, an announced candidate for the First Congressional District seat.

The author of the sales tax holiday measure, Rep. Bill Nations, D-Norman, said he plans to introduce the measure again next year.

``We'll keep doing it until it works,'' Nations said.

A budget agreement announced last week proposes $46.3 million in tax cuts, including a cut in the state's top income tax rate and an earned income tax credit to help low- and medium-income families.

But Sullivan said cutting the income tax rate from 6.75 percent to 6.65 percent will save a family of four that earns $32,000 just $12 a year. Eliminating the state sales tax on groceries would save the same family $31 a month.

``It is the fairest and fastest way to get relief for all Oklahomans,'' Sullivan said.

Supporters maintain the tax is unfair because groceries are a necessity. Thirty-four states do not charge a sales tax on groceries or have dramatically reduced taxes.

An omnibus tax bill passed by the House and Senate included a plan to eliminate the tax on groceries and over-the-counter drugs and medicines over three years. But the plan, which would cost $180 million a year, is mired in a joint conference committee.

House Speaker Larry Adair has said the revenue loss is more than the state can afford. But Sullivan said the state has surplus revenue this year and no services would have to be cut.

``Oklahomans want grocery tax sales elimination now,'' said Rep. Thad Balkman, R-Norman.

Balkman said he has already laid the groundwork to begin circulating an initiative petition this fall or winter to eliminate the grocery tax.

A sales tax holiday bill was also passed by the House and Senate but it is not expected to emerge from a joint House-Senate conference committee.

The plan would waive Oklahoma sales taxes on clothing and footwear purchases during a three-day period in early August. Articles with a sales price of less than $100 per item would be eligible for the exemption.

It is patterned after a popular tax holiday in Texas that has proven popular with back-to-school shoppers on both sides of the Red River.

Texas officials say the 1999 and 2000 tax holidays saved taxpayers a combined $69.6 million in state and local taxes.

Sen. Jeff Rabon, D-Hugo, said he supports the plan, which would cut state revenues by about $6 million a year.

``It was really in response to merchants in my district who are getting pummeled,'' Rabon said. He said shoppers in his area flee to Texas every year to take advantage of tax-free shopping.

Adair has said he also supports the plan but that it has been put on hold while state officials study a plan to adopt the entire Texas tax code.