Mississippi Senate pumps brakes on changes to state taxes, prefers to study matter

Published 6:25 am Wednesday, March 24, 2021

The Mississippi Senate is again resisting House efforts to make big, quick changes to the state tax structure.

Senators have adopted a resolution to create a 14-member tax study committee that would meet later this year. But, the House could kill this effort by the Senate.

Republicans control both chambers, so this is not a partisan fight. Senate leaders say they are leery of making significant changes without public hearings.

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The House voted in February to phase out Mississippi’s income tax, cut the 7% grocery tax in half and increase several other taxes. The sales tax on clothing and many other items would rise from 7% to 9.5%.

The House passed the bill the day after it was introduced. Republican House Speaker Philip Gunn said phasing out the income tax could spur economic growth. Critics said increasing consumer taxes could hurt low-income residents and retirees. Mississippi already does not tax retirement income, but retirees pay sales taxes.

Senate Finance Committee Chairman Josh Harkins, a Republican from Flowood, killed the House tax bill last week by not bringing it up for a committee vote. House leaders revived the plan by inserting it into a separate Senate bill, but that bill might not survive during final negotiations.

Harkins said Monday that creating a tax study was his idea. Members would be the state economist, the state revenue commissioner and 12 lawmakers.

“If we’re going to look at tax reform, let’s look at it holistically,” Harkins said. “Let’s put everything on the table … tax diversions, tax credits. Let’s see where our revenue’s coming in from and how much we’re bringing in and where it’s going.”

The three-month legislative session is scheduled to end in early April. House and Senate negotiators face a Saturday deadline to work out details of a state budget that tops $6 billion. The new state fiscal year begins July 1.

Republican Sen. Chris McDaniel of Ellisville said Monday that he wants to phase out the state income tax but delete parts of the House bill that would increase other taxes.

“Kicking the can down the road is not a policy position,” McDaniel said. “More delay is not the answer. We have all the data we need.”

Republican Sen. Chad McMahan of Guntown said he had asked accountants to evaluate the House bill, and they told him it would result in an overall tax increase for most people.

McMahan asked McDaniel: “What’s wrong with delaying it for nine months and having public hearings across the state so all Mississippians can have an opportunity to contribute to the conversation?”

The only senators voting Monday against the resolution to create a study committee were McDaniel and fellow Republicans Kathy Chism of Myrtle and Melanie Sojourner of Natchez.