If you do business in Kentucky and conduct business over the Internet, even in a tertiary way, you need to understand the negative ramifications this bad bill could have on your business!
House Bill 347 dramatically redefines eligibility for sales and use tax and a review by Northern Kentucky business leaders of the byzantine language of this bogus bill has led many of us to conclude that if could increase taxes on any business that provides a product or service over the Internet.
Stop for a moment and imagine any or all of the following items subject to new taxes:
- Electronic media such as a webinar you conduct for clients
- Service contracts your business offers to customers that involves service or products through the Internet
- Ongoing service provided for a digital product purchased or services through the Internet
- Downloading your bank account reconciliation information
- Uploading information to your accountant
- Exchanging contracts with your attorney
- Software as a Service (SaaS) applications
- Stock photography services
- Web services and EDI based services that exchange information between companies
- Information available for purchase from newspapers and magazine
- Who know what else greedy politicians who have an insatiable thirst for your money might try to tax under this bill!
Due to the vague, open-ended language of this bill, it seemingly could be construed to cover virtually anything provided through the Internet. Even if the language is not as open-ended as is currently appears, your costs may go up substantially due to the need to have more accountants and attorneys review every single business transaction to ensure that they are not subject to this new tax! New costs that businesses simply don’t need and can’t afford!
Northern Kentucky Tech leaders are painfully aware of the chilling effect this bill will have on business and job creation, especially in light of the current recession. Chris Sturm, President of Capital Software (one of our business partners) said “Taxes if not kept in check tend to expand not contract. This type of legislation seems to directly contradict all the incentives the state is putting in place to draw new businesses to Kentucky. ” I couldn’t agree more!
Apparently, the legislators on the A&R committee who voted this bill out of committee 19-3 last Tuesday do not understand that this bad legislation completely contradicts the efforts of other business and government leaders to bring new jobs to Kentucky and is in clear opposition to the stated goal of Vision2015 to create 50,000 new high paying jobs in Northern Kentucky. Many of these 50,000 new jobs would by necessity be tech jobs and this bill will help to ensure that goal is NEVER REACHED!
This goal will not be reached because the paying jobs they hope to create are not bound by traditional geographic boundaries. With web-based collaboration and communications, these jobs can exist anyplace. And as such, these jobs will naturally gravitate toward business friendly environments with likeminded thinkers and talent. Not only is this bill counter to the goals of Vision 2015, but it also runs counter to Kentucky’s own Department of Commercialization and Innovation, which is funded by tax dollars to enable high technology companies.
In fact, any business owner who is already burdened with cumbersome, unnecessary regulations and punitive taxation knows that this bill and others like it, especially when our econony is already in tatters, will most likely produce the following results:
- Businesses that can will pass the new cost onto consumers, causing them to purchase less and resulting in a new loss in revenue and taxes.
- Jobs will be cut to offset the overhead of the new tax and the cost of complying with it.
- Kentucky will lose businesses that elect to move to a business friendly state to avoid taxes, and for tech businesses, the very kind that we claim we want more of, location is not important and moving is easy!
The Northern Kentucky Chamber of Commerce, seeing the potentially dire consequences of this bill, took emergency action at a board meeting last week and voted unanimously to oppose this bill (for the sake of disclosure, I am a Chamber Board member).
Again if you do business in Kentucky, this bogus bill could significantly increase your costs. I urge you to read House Bill 347 and immediately call your representative at 1-800-372-7181. You can leave a message for any Kentucky official expressing your concern for Kentucky businesses and jobs. Alternatively, you can find your legislators and read the text of any bill through the LRC web site at: http://www.lrc.state.ky.us/Legislators.htm.
This bad bill passed yesterday in the house along party lines with the final vote being 69 -25 and 6 not voting.
Royce Adams (D), Dry Ridge
Dennis Keene (D), Wilder
Tom McKee (D), Cynthiana
Rick Rand (D), Bedford
Arnold Simpson, Covington
Joe Fischer (R), Ft. Thomas
Tom Kerr (R), Taylor Mill
Adam Koenig (R), Erlanger
Sal Santoro (R), Boone Co.
Alecia Webb-Edgington (R), Ft. Wright
Addia Wuchner (R), Burlington
Please thank the represenatives who votes against this bill!
Now we need to turn our attention to the Senate! It looks like the bill will head to the Senate A&R Committee, whose members are listed below:
APPROPRIATIONS & REVENUE (S)
Sen. Charlie Borders (R), Chair
Sen. Bob Leeper (I), Vice Chair
Sen. David E. Boswell (D)
Sen. Tom Buford (R)
Sen. Denise Harper Angel (D)
Sen. Ernie Harris (R)
Sen. Dan Kelly (R)
Sen. Alice Forgy Kerr (R)
Sen. Vernie McGaha (R)
Sen. R.J. Palmer II (D)
Sen. Joey Pendleton (D)
Sen. Tim Shaughnessy (D)
Sen. Brandon Smith (R)
Sen. Robert Stivers II (R)
Sen. Gary Tapp (R)
Sen. Elizabeth Tori (R)
Sen. Jack Westwood (R)
Please contact your senator and the members of the A&R committee and tell this to oppose this bad bill!
Finally, if you’d like to join our growing coalition of Northern Kentucky business and tech leaders who are working to stop this bill, please e-mail me at dhatter@lilbertastechnologies, or call me at 859-912-2399.