Tax revenue shortfall creates complex issues

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Jimmy Higdon,

The report of tax revenue shortfalls brings to mind that we all can help by supporting legitimate businesses that comply with the law. This issue came up during the session earlier this year as we worked to make penalties stiffer for companies who used software that made the revenue owed to the state disappear. This software commonly referred to as “tax zapper” works by changing the sales totals on computerized registers. This allows retailer to keep sales tax revenue that is due to the state. In other words, the perpetrators are stealing money from both the consumer and the state.
With House Bill 69, the General Assembly made the use of tax zappers a class D felony offense. In addition, all profits made from the illegal activity would be forfeited and the retailer’s business permit would be suspended for ten years.
The potential impact of this activity would cost the state a great deal of revenue. One estimate claims that Kentucky could be losing up to $200 million per year in revenue. The use of tax zappers is a national problem and Kentucky is not the only state to enact such legislation. California, Connecticut, Vermont, Illinois, Louisiana and North Carolina have such laws on the books, and more states are sure to follow suit.
In other budget-related challenges, state agencies will most likely receive budget cuts to absorb the revenue shortage. I call upon Governor Beshear to ensure that childcare payments continue, and refuse to make any cuts to them in order to balance the budget.
As we close out June, I know many of us are excited about Independence Day, one of our greatest holidays. On this day, we can all come together and celebrate our freedom and liberty. As the Co-chair of the Veterans, Military and Public Protection Committee, I also take this as another opportunity to remember and pray for our veterans and active service people. It is because of their willingness to serve that we enjoy our freedoms. I wish you and your family and Happy Fourth of July.