The Bluegrass Institute for Public Policy Solutions

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Would a local sales tax make Kentucky cities more competitive?

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A city or local sales tax to boost revenue and competition?

A recent editorial by the Lexington Herald-Leader makes the case for cities and local governments to have more taxing authority and claims that this will make cities more competitive:

How can Kentucky cities compete in a 21st-century economy when their hands are tied by a 19th-century constitution?

That question should rank high on the list for consideration by Gov. Steve Beshear's Blue Ribbon Commission on Tax Reform as it enters the home stretch of a statewide listening tour.

The mayors of Kentucky's two largest cities have already told the tax reform commission that voters should be given the option of approving a local sales tax for capital projects.

The state constitution prohibits local governments from levying a sales tax, which makes Kentucky one of 14 states in which cities and counties lack that authority.

This puts Kentucky cities at a disadvantage when it comes to providing the amenities and infrastructure that other cities can offer.

Is more revenue the answer? Perhaps the Lexington Herald-Leader and state representatives should consider a reduction in spending instead of squeezing Kentuckians with an added sales tax.

Also,  state and city leaders should consider the possibility that if a local sales tax is levied, citizens may vote with their feet and leave for greener tax pastures.