Wisconsinites may start paying more sales tax, under a plan from State Senator Jon Erpenbach (D-Middleton). The proposal would eliminate a large number of exemptions that are currently in place for several products and services. The money gained by ending the exemptions would be used to fund schools, removing the current system of using property taxes to pay for education.
Sales taxes already generate over $4 billion a year for the state, but Erpenbach says loopholes are putting an extra burden on residents by making them pay instead of businesses. He says state funding has never been cut to pay for those tax breaks, so residents have been making up for them. The proposal would still exempt several products from the sales tax, such as food and clothing.
Officials with Wisconsin Manufacturers and Commerce say the proposal would create new taxes on businesses and services. Spokesman Jim Pugh says it could lead to an unstable business climate in Wisconsin by increasing the prices consumers pay. Also, Pugh says current state law already protects services from being charged a sales tax.
Meanwhile, the Wisconsin Counties Association is also asking state legislators to re-examine sales tax exemptions. Association Executive Director Mark O'Connell says it's a huge source of revenue for balancing the budget and providing money for local government services. The WCA proposal would only eliminate about $750 million worth of sales tax exemptions.
Erpenbach says the proposals will likely face some resistance. He says the more important focus is beginning a discussion about ending sales tax exemptions.
WIBA's John Colbert contributed to this report.