CASPER — Wyomingites probably won’t see a big change in sales taxes this year after lawmakers tabled a sweeping bill that would have nixed most exemptions while decreasing the overall sales tax rate.
House Bill 72, sponsored by Rep. Landon Brown, R-Cheyenne, was intended to simplify and update Wyoming’s “outdated” tax structure while accommodating the state’s shift toward a service-based economy. (Under current state statute, services are exempt from sales taxes.)
Lawmakers, however, ultimately decided to table the bill for the rest of the session.
Brown’s bill would have reduced the overall sales tax rate from the current 4% to 2.5% and also removed a lot of the exemptions to the tax that are currently on the books, with the exception of legal and banking services.
Counties, however, would have also been able to decide by local elections whether or not they want groceries to be exempted from local sales tax.
“I have friends that have businesses where they perform services, and they don’t have to collect and remit sales tax back to the state. But I also have friends that run businesses here that are retail, and they’re required to. That doesn’t seem very equitable to me,” Brown argued Tuesday before the House Revenue Committee.
Brown implored the committee to move along the bill so that the “62 minds” of the House of Representatives could at least talk it over.
But it was a pretty big ask in a state that’s notoriously tax-averse.
Behind the lawmaker sat a room full of people waiting to testify against the bill. No one in the crowd came forward when Rep. Steve Harshman, R-Casper, asked if anyone wanted to speak in favor of it.
“I am fully recognizing that we are going to have a discussion that we are going to increase taxes on some people in Wyoming,” Brown said, adding that the general public, however, would “see a decrease” in taxes under the way the bill was written. “I just would like to make mention that the people who would be here to speak on behalf of this, the families, they are working, and they’re not able to be here. They’re not even able to Zoom in right now. Because they’re working at Target, they’re working at the state, they’re doing the things that they have to be doing.”
Some lawmakers were worried about the bill’s monetary impact and suggested that it be tweaked to be fiscally neutral.
As the bill was written, it would have overall reduced revenue for the state’s general fund by roughly $157 million in fiscal year 2024. Locally, revenues would have decreased by roughly $13 million overall in the same timeframe.
On top of the lowered sales tax rates that would result in less revenue, Bret Fanning, administrator of the Wyoming Department of Revenue Excise Tax Division, said the department would probably have to hire about 15 more people to administer the bill’s proposed sales tax structure.
To make the bill fiscally neutral, Fanning said the suggested sales tax would likely have to increase to 3% or more.
Some also questioned the reasoning behind specifically exempting legal and banking services from the sales tax.
“The people who tend to need legal services in our state, they are the mom and pops (who) find themselves in a small lawsuit with a bigger company. They need to file for divorce. Whatever the case may be, I see it as a regressive nature and legal services are already expensive,” Brown explained. (A regressive sales tax would take a bigger percentage of money from low-income taxpayers than from high-income taxpayers.)
He had a similar point when it came to exempting banking services from his proposed sales tax.
“The idea that we want to tax and have government make money off of somebody keeping my money because that’s a safe place to keep it is probably not the best recommendation,” he said.
But when it came to exempting legal services in his bill, Brown conceded that he’d had some conversations with lawmakers who brought to his attention that Wyoming also has “a lot of corporate law,” and that the state could benefit from collecting sales taxes from that kind of legal service.
It’s possible that discussion of Wyoming’s sales tax structure will become an interim topic, when lawmakers would have more time to go through the ideas that Brown presented in his bill. Some lawmakers suggested as much.
This story was published on Jan. 18, 2023.
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