Lawmakers broaden Kentucky's sales tax to include services such as auto repairs and landscaping

LOUISVILLE, Ky. (WDRB) -- The decision of Kentucky's Republican-dominated legislature to impose sales taxes on services such as auto repairs will result in a lot more junked cars on the side of the road, one experienced Louisville mechanic said.

Andrew Johnson, who has been fixing cars since he has 11 years old, said he enjoys what he does but would not enjoy charging more for his services.

“People that can't afford these car repairs now are really not going to be able to afford them,” he said.

That is because lawmakers passed a tax reform package Monday that includes imposing a sales tax on services such as car repairs.

Customers already pay a 6 percent tax on parts. If the legislation becomes law, they would also pay 6 percent on the labor.

“The older people, teachers, they're not going to be able to afford this,” Johnson said.

The expansion of the sales tax hits more than auto repairs. It would also include services such as landscaping, janitorial services, grooming for small pets, fitness centers, country clubs and non-medical weight loss centers.

Senate President Robert Stivers said the move toward taxing consumption instead of production will help encourage economic growth and help stabilize the state’s budget

“I think that this is a step in the right direction,” Stivers said.

Stivers and other supporters point out the broadening of the sales tax comes with a lowering of the personal income tax by one percent to 5 percent.

“These sales taxes where we are broadening the base, you'll get to keep more of your money and then decide how you want to be taxed based on your spending patterns,” said Senate Majority Floor Leader Damon Thayer during debate on the Senate floor.

But critics contend the new sales taxes will hit the poor the hardest.

“At the end of the day, it benefits the wealthy at the expense of the working class people,” said Sen. Reggie Thomas (D-Lexington).

That is Johnson's concern as well. He believes customers will neglect needed repairs.

“Nobody's going to change their oil," he said. "You're going to have more cars broken down. It's a never-ending, vicious cycle.

Gov. Matt Bevin has signaled opposition to at least some of the tax bill, but there is no word yet as to whether a veto is coming.

“I hope he vetoes it, but I don't think he will,” Johnson said.

The tax reform vote was so close, 20-18 in the Senate and 51-44 in the House, that it isn't clear whether there is enough support to override a potential veto by Bevin.

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