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Officials tell committee that sports betting, online sales tax are not the answer to state’s financial woes

By Tom Latek
Kentucky Today

Neither sports betting nor sales tax for online purchases will solve Kentucky’s financial woes, a legislative committee was told on Thursday.

Department of Revenue Commissioner Daniel Bork told the Appropriations and Revenue Committee internet retailers and mail-order companies weren’t required to collect sales tax on out-of-state sales until a 2018 U.S. Supreme Court ruling in a South Dakota case, which reversed other court decisions dating back to 1967.

Department of Revenue Commissioner Daniel Bork (left) testifies on the online sales tax issue Thursday. (Photo by Tom Latek,Kentucky Today)

As a result of the ruling, the General Assembly passed legislation this year regarding out of state sales tax collections, mirroring South Dakota law provisions upheld by the court ruling.

“We have a safe harbor for those with limited business in the state,” Bork testified. “Our law is not retroactive, and we are a member of the multi-state Streamlined Sales Tax Governing Board.”

Bork said sales tax is already starting to be collected, but out of state vendors have until October 1 to register with the state or the Streamlined Sales Tax Governing Board, a deadline that has also been set by 11 states.

When asked by lawmakers how much money the internet sales tax would raise each year, Bork replied, “The GAO put out some numbers for Kentucky, estimating $93 to $140 million. I don’t believe our numbers are that high, because due to our membership in Streamline we collected $36 million last year, and because Amazon has a large presence here, they’ve already been collecting it for quite some time.”

A recent Supreme Court decision also struck down a federal law that banned sports betting in every state except the four who already allowed it in 1992 – Nevada, Delaware, Oregon and Montana.

Jennifer Hays of the Legislative Research Commission staff attended a conference on the issue during the June National Conference of State Legislatures meeting in Los Angeles and reported on what she learned there.

She testified that although Nevada has accepted sports wagering since 1949, it really doesn’t generate that much in tax revenue. “In 2017, the biggest, longest-acting state collected approximately $16 million,” Hays said. “I don’t think Kentucky should expect any more than what Nevada is receiving.”

Although there was $4.8 billion dollars wagered, she said most of it was returned in payouts. The margin in the business is very small, about five percent, and the excise tax on the profits is 6.75 percent, leading to $16.2 million in revenue.

No mention was made of a legislative task force that has been formed to look at the issue and make recommendations for possible legislation during the 2019 General Assembly.

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One Comment

  1. Desiree Owen says:

    If anyone believes the new 6% sales tax on services brings in more than either of those two ideas needs to go back to math class.

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