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Lt. Gov. Delbert Hosemann did not rule out passing a version of the massive tax restructuring bill approved last week by the Mississippi House even though he cited what he said were multiple problems with the legislation.
Still, Hosemann, speaking publicly about the bill for the first time, left the impression that if the bill makes it out of the Senate before the March 16 deadline it will be dramatically different than the proposal that passed the House. And, based on Hosemann’s comments, it is far from a certainty that the bill will survive the deadline.
“I have not had one senator come to me and tell me he wants to pass this bill,” said Hosemann, speaking Monday during a video conference to Mississippi State University’s Stennis Institute of Government and the Capitol Press Corps. “…The Senate is not Nancy Pelosi. We don’t adopt it and find out how it will work after we pass it.”
Later, responding to a question, Hosemann said he was not belittling the approach of Speaker Philip Gunn who introduced and passed his Mississippi Tax Freedom Act in less than 24 hours. When asked why there was not more communication between House and Senate leaders before the bill was taken up, he said, “You will have to ask the speaker that.”
But he said, “I don’t think it any secret the speaker and I are personal friends. He has a tremendous heart and tremendous love for Mississippi, but that doesn’t make him right all the time.”
Hosemann praised the speaker for bringing forth legislation aimed at providing tax relief and reducing government spending.
“I am receptive to that idea,” he said. But “This bill is extremely long and has several unintended consequences.”
He said such unintended consequences could lead to an economic slowdown and a reduction in state revenue that might impact vital state services.
The bill, authored by Gunn, would phase out the state’s personal income tax over a 10-year period, reduce the sales tax on groceries by one-half to 3.5% and increase the sales tax on most other retail items by 2.5 cents on each dollar spent. The state’s current sales tax is 7% on most general sales tax items with lesser amounts such as 1% to 3% on primarily “big ticket” items, such as farming equipment, airplanes, vehicles and manufacturing equipment.
The bill would provide a near immediate substantial tax cut, exempting in 2022 the first $50,000 in income for a single person and the first $100,000 for a married couple.
Hosemann said the bill could negatively impact farmers, manufacturers and others. He cited retirees who generally do not pay a state income tax as a group that could be negatively impacted by the sales tax increase. He did not take into account the fact they would be paying less in grocery taxes under the legislation.
Despite citing issues with the bill, Hosemann did not rule out passing a version of the legislation this session.
He said he has asked the state economist “to model out” what could be the consequences of the legislation. Hosemann also did not rule out the issue being studied during the summer, presumably with the purpose of tackling similar legislation in the 2022 session.
Gov. Tate Reeves has proposed phasing out the state income tax, which provides about one-third of the state general fund revenue, without raising other taxes to make up for the loss revenue. Reeves said the tax cut will spur economic growth, leading to new revenue for the state.
Gunn has said his proposal would “broaden” the tax base by levying taxes on consumption rather than income. He has argued that if the bill becomes law, an average Mississippian earning $50,000 per year would have to spend about $82,000 in a year to pay as much in sales taxes as the taxpayer would save from the income tax cut.