A nonprofit publication of the Kentucky Center for Public Service Journalism

Gena Bigler: A tax on services could hurt poorer Kentuckians in areas like car repairs


In most of Kentucky, a car is a necessity, and for many that means an older car that frequently needs a mechanic to keep it running.
 
Public transportation simply isn’t available in huge parts of the state with more than 50 percent of Kentuckians living in rural areas. If you want to work or go grocery shopping, you have to have access to a car. The new proposed tax on services makes it more expensive to maintain that car and would disproportionately impact those living in poverty.
 
If you can afford to buy a new car, this tax will have a minimum impact on your wallet. New cars require less maintenance and some dealers’ package years of basic service like oil changes into the purchase.
 
Conversely, the lower you are on the poverty scale, the more work your car is likely to need. A brand new Toyota will have fewer trips to the mechanic than a 10-year-old beater.
 
The lower you are on the poverty scale, the less likely you are able to afford an increase in car repairs. Adding a tax to services and increasing the cost of basic car maintenance makes it more difficult for Kentuckians living in poverty to maintain safe cars.
 
The new service tax would affect campgrounds, marina rentals and even fitness centers. This impacts family vacations, costing Kentuckians more to spend a weekend camping and fishing. In a state ranked sixth most obese, do we really want to make it more expensive for Kentuckians to work out?
 
Computers and computer repair would also suffer the service tax of 6 percent. At the same time Kentucky is struggling to expand technology access in the state, it is making it more difficult to afford. While providing incentives to lure tech companies, adding a service tax for citizens seems contradictory.
 
The median household income for Kentucky is around $41,000 which is about $10,000 less than the rest of the nation. Poverty in Kentucky is a serious problem. Kentucky has the fifth highest poverty rate in the United States. Taxing necessary services is a harsh blow to those who can least afford to pay.
 
The proposed tax changes increase taxes on service industries while giving tax breaks for already profitable and successful industries. Bourbon sales are up and the industry has doubled in the past decade and that growth is expected to continue. Bourbon is flourishing, even with its current rate of taxation. Why cut their taxes with all that growth?
 
How do average Kentuckians benefit from giving breaks to booming industries? Why give a tax break to a large multi-state corporation while adding a tax for workers? Why decrease the tax on alcohol? Do we want Kentuckians to drink more?
 
Kentucky needs to broaden its tax base, but putting more on the backs of low wage workers is not the answer. It is easy to lose sight of the individuals affected when looking at the big picture. Kentucky isn’t balancing its budget and the state needs more income. But while looking at the big picture, I hope our representatives will zoom in to look at the family barely making it on a minimum wage income while driving to work in a 10-year-old car.
 

Gena Bigler is passionate about public service and credits her time serving nonprofits in AmeriCorps and Volunteers in Service to America (V.I.S.T.A.) with teaching her extreme budgeting and bargain shopping. Gena is now CFO of McNay Settlement Group and serves on the board of the Lactation Improvement Network of Kentucky (L.I.N.K.). Gena would be happy to hear from you at lgbigler@gmail.com.

 

Click here to read more columns from Gena Bigler.


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