A new proposal prepared by a state tax reform working group, including key state legislators, seeks to expand the Kentucky state sales tax to advertising and public relations. The expansion of the sales tax also would apply to a long list of other services in the state, making it one of the most far-reaching service taxes in any state.

The reform proposal is part of an ongoing effort to deal with the growing deficit in Kentucky. The working group proposal also would reduce the current Corporation Income Tax, establish a 6% rate for sales tax and change the payment brackets for state income tax.

Frankfort analysts suggest that the legislature, in the midst of its even-year 60-day session, is likely to postpone consideration of the working group’s report until after the Fall elections. At that time, the legislature would return for a special tax session to consider changes to Kentucky’s tax regulations.

The 4A’s will be working with a number of other Kentucky business groups to monitor developments growing out of the tax proposals and will continue to report to you. Meanwhile, we urge you to be aware of the potential debate on this issue and to use your contacts with state leaders, business organizations, and other businesses to make your concerns known.