Santa is busy checking his naughty and nice list, and so are legislative lobbyists, economic development organizations, chambers of commerce and other small business advocates. These groups are checking their naughty and nice lists of business friendly (or unfriendly) legislators, and making a wish list of pro-business legislation for 2004.
Kansas The Kansas legislative session starts on January 14, and a number of issues will be in play for small business. Leading the pack will be sales tax collection. Last session, legislators passed a bill containing the Streamlined Sales Tax Project, which turned out to be anything but “streamlined.” The sales tax provision requires that businesses collect sales tax based on the destination of their product when delivered. So, for example, a small antique store in Lawrence would have to charge the local sales tax for an Internet customer in Newton, Neodesha or Nortonville.
But the complication isn’t just the hundreds of towns and cities spread throughout Kansas. Johnson County alone has six tax rates across 20 taxing jurisdictions. Any Johnson County business delivering within Johnson County would have to know, and charge, the appropriate sales tax for the customer’s address. The state has 761 taxing jurisdictions, and adding to business workload is the requirement that businesses file monthly paperwork with the state showing how much sales tax is collected for each jurisdiction.
Even before it took affect on July 1, legislators and Gov. Sebelius were backing away from the law as the Capitol phone banks lit up with irate business owners. A six-month moratorium was immediately put in place and legislators and the governor promised action in the 2004 session. A complete repeal of the law may be difficult, however, because the provision was originally included to meet federal guidelines. But, with the hue and cry coming from the business sector, the legislature will have to address the issue in some manner.
Missouri While Kansas business owners are fighting the way taxes are collected, their counterparts in Missouri are fighting against taxes, period. Business advocates are wary of Gov. Holden’s attempts to get more money from businesses.
One of Holden’s proposals this year was to eliminate the employer wage withholding allowance formula. Since 1961, the allowance has provided a discount for the timely filing of withholding taxes. Essentially, it compensates businesses for acting as tax collector of employee income taxes and wage garnishments. It’s estimated that the elimination of the allowance would cost businesses $14.8 million dollars a year.
Missouri small business advocates will be keeping a close eye this legislative session to derail any tax increases harmful to small business. Although the economy is gaining some momentum, the recovery is still far from assured⎯particularly for small companies. Additional tax burdens will only slow that recovery.
Help Fight Your Own Battles While there are a plethora of people and organizations advocating for small business, their work doesn’t mean small business owners can abdicate all of the responsibility. A phone call or e-mail to your legislative representative is an important reminder that what legislators do at the Capitol affects real people back home. Keep in contact with your government representatives, and keep them accountable to you.
David Day is owner of daybyday communications, which offers affordable public relations and business plan consulting to small business. He also serves on the Lawrence/Douglas County Economic Development Advisory Board. He can be reached at
