Overturn of sales tax on nonprofits needed
Published 1:00 am Sunday, October 7, 2018
We stated in a July 8 editorial that we believed the Republican-controlled legislature was wrong to pass legislation that imposed a 6 percent sales tax on nonprofit organizations.
We are still of that opinion.
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Nonprofit organizations do a lot of good for a lot of people in our city and throughout the state. They provide food for the homeless, put a roof over their heads during times of inclement weather and also try to help them find work and housing. Theses nonprofits operate on limited budgets as it is, mainly getting their funding to operate through grants, fundraisers and donations from people within their communities.
It’s worth noting that the legislation, House Bill 487, was passed near the end of the legislative session without the required three readings. This showed a total lack of transparency on behalf of the legislature and caught many of these nonprofits off guard. Due to the lack of transparency, many nonprofits had little time to become aware of what was happening to them. As a result, their voices went largely unheard.
One only has to look at the recent Bowling Green International Festival, which is a nonprofit event. Angela Jones, the president of the festival’s board of directors, saw firsthand how the sales tax mandate affected that event.
“The impact we felt was both on the gate admissions and on the fees we charge vendors,” Jones said. “We did assess the sales tax when we calculated vendor fees this year. Several expressed frustration with the fee.”
Jones said the International Festival didn’t raise ticket prices this year, opting to absorb the cost of the sales tax.
“We calculate that we will owe about $1,500,” Jones said. “That’s money that we won’t be able to invest back into the festival.”
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This is a real shame and just one example of why this law needs to be overturned. Imagine how many other nonprofit organizations and nonprofit events have been impacted by this unfair law across the state.
We would venture to guess that there are quite a few, which is very disappointing because this is money that they desperately need.
Now, with the legislative session to begin in Frankfort in January, it is time for them to be heard. Even before the session has started, it appears that is already happening. A bill prefiled by state Rep. David Osborne, R-Prospect, has picked up endorsements from 37 of his colleagues in the House of Representatives. Called Bill Request 76, Osborne’s proposed legislation would maintain a tax exemption on the purchase of admission tickets sponsored by any nonprofit, charitable or religious organization.
Kentucky Senate President Robert Stivers is on board with Osborne’s bill and expressed his support in a guest article in the Kentucky Gazette.
“It was never the intent of the legislature to force nonprofits to charge sales tax on tangible items or admissions to events,” Stivers wrote. “I expect the General Assembly to act quickly on this measure to provide relief for the nonprofit community in the commonwealth.”
It means a lot to see and hear state legislators such as Osborne and Stivers and many of their colleagues essentially say: We messed up and we’re going to do our best to do away with this unwanted tax.
As we’ve stated, this should’ve never become law, but it does say a lot that these lawmakers have indicated it wasn’t their intent to charge nonprofits sales tax. We take them at their word and are hopeful that when they convene in January they correct this wrong.