Nevada County Picayune and Gurdon Times Newspaper Archive

People Get Tax Breaks

from State Sen. Mike Ross

A lot can be said about the recent legislative session, but two words certainly describe it best -- tax cuts. State taxes have indeed been cut, and an examination of just what the legislature did shows why.

Numerous tax relief measures were enacted and state general revenues are estimated to decrease by about $90 million over the next two years.

The major tax cut adopted by the General Assembly was Act 328 of 1997, which lowers state income taxes. The act also expands eligibility for property tax refunds, increases credits for social security taxes paid and for child care costs, and indexes tax brackets to prevent inflation from driving up individuals' tax rates.

Because of the effective date of act 328, its tax relief provisions will not be implemented in the 1997-98 fiscal year, which begins July 1. The $90 million in tax relief will begin in the second year of the biennium, which is fiscal year 1998-99.

Some citizens are gathering signatures on petitions to place on the November 1998 ballot a proposed constitutional amendment to eliminate the sales tax on food. If the proposal is passed by voters, Act 328 would not take effect. When legislators debated Act 328 they were aware of efforts to eliminate the tax on food and were concerned about the negative impact on state services that would occur if two major tax reductions went into effect.

The legislature enacted numerous other tax relief measures, such as Act 1232. It raises the threshold for having to pay sales taxes on the purchases of used motor vehicles from $2,000 to $2,500.

Act 1232 also allows car owners to reduce their sales tax liability if they sell their old cars themselves, such as through the want ads, rather than trading it in for a new vehicle.

When the act takes effect on January 1, 1998, individuals will only have to pay sales taxes on the difference in price between the old car they sell and the new car they buy. They must buy a new or used car within 45 days of selling their old car to qualify for the reduced sales tax. State budget officials estimate that Act 1232 will decrease sale taxes on motor vehicles by about $4.2 million a year.

Other tax relief measures include Act 421, which increases the tax credit for surface water project for industrial and commercial use, if the projects are in areas where supplies of groundwater are in critically short supply. The maximum credit for agricultural and recreational projects is $9,000, and for industrial projects it is $30,000. Unused credits can be carried over and claimed for two succeeding years for agricultural and recreational projects, and for four years if the credits are claimed for an industrial project.

Act 884, which will reduce general revenues by about $245,000 a year, will exempt from the sales tax the sale of prescription drugs to physicians. Act 1076 reduces sales taxes on long-term automobile leases by an estimated $2.7 million a year. Act 1263 repeals the sales tax on credit reporting and debt collecting, lowering state general revenues by $763,000 a year.

Act 137 provides that promoters of county fairs do not have to collect sales tax from vendors at the fair. Act 603 exempts from the sales tax the sale of goods and services to the Salvation Army. Acts 137 and 603 will reduce revenues by an estimated $15,000 each.

Act 441, which will lower taxes by about $400,000 a year, exempts from the sales tax materials and supplies used in building and maintaining volunteer fire departments, as well as goods used to repair emergency equipment and fire protection equipment.