If you suddenly find yourself paying a little extra for your spray tan, or to have the wine stains removed from your blouse, or to play a round of golf with your buddies, that’s because you are paying an additional 6% sales tax. Previously, there wasn’t a sales tax added to these services.
Governor Matt Bevin vetoed the tax bill in April, but the legislative branch overrode the veto with a 57-40 House vote and a 20-18 Senate vote. This new tax bill went into effect on July 1, 2018. Members of the House and Senate say they want to reform Kentucky’s tax code, which they believe to be outdated and non-beneficial to the state’s progressing economy. After adding the sales tax, officials predict an additional $500 million will be raised toward the state’s revenue within two years.
In all, 17 previously exempt services are now forced to issue a 6% sales tax to customers. Some of these services include bowling centers, golf courses and country clubs, fitness and recreational sports centers, landscaping services, small animal veterinary services, indoor skin tanning services, plus several more. Nonprofit organizations are no longer tax exempt as a result of the tax bill, and a 50 cent additional tax was added to cigarettes.
“I think the whole thing is screwed up,” said Gale Leibfried, owner of Brackins Pet Grooming, located at 515 Salem Drive. “I’ve been doing this for fifty years and this is the first time I’ve had to charge a sales tax.”
Pet care services, another business added to the list, now have to charge customers an extra 6% for their pets’ grooming needs. Leibfried doesn’t feel the sales tax is unfair strictly because her customers have to pay more. To Leibfried, the new tax bill is unfair because some businesses got slapped with the sales tax while others remained exempt. To her, the decision to hit animal grooming services with the tax, while leaving human hair salons exempt, is illogical.
“What we do is no different than what they do. Our customers just have four legs instead of two,” Brackin said.
Swan Cleaners, a locally owned and operated dry-cleaning business in Owensboro for over 72 years, has been a part of owner Danny Payne’s life for 33 of those years. Payne worries that the added sales tax will have a negative impact on his long-running business.
“I don’t like it myself,” said Payne. “I spend 45 minutes every day handling the extra paperwork for this, when I should be paying attention to my business. We have extra record-keeping to do because, the thing is, we don’t sell a product–we sell a service. Retail stores don’t have to go through the paperwork and add the sales tax to a credit under someone’s name because it automatically gets added to the product at the time of sale.”
Aside from the paperwork, Payne feels that the added sales tax could potentially turn customers away from his already-slowing line of work. It worries Payne that the higher cost of services could take a toll on Swan Cleaners’ future.
“The sales tax increased the costs around forty cents per item,” said Payne. “My customers didn’t like it when they had a 10-cent increase. Imagine what they thought about four times that amount.”
Payne can’t yet tell whether the sales tax has been to blame for slower business as Swan Cleaners is currently in the middle of their slow season. However, he doesn’t expect it to help anything, and his concern is that Kentucky legislatures didn’t realize how the added sales tax would impact small businesses.
“They didn’t do their homework,” said Payne. “They just think about being in a crunch and getting by with a fix. They’re going to get $10,000 from my business within a year. That’s $10,000 taken away from my customers.” Payne added that businesses like his don’t have a choice about adding the tax–they just have to do it.
Leibfried feels the same contempt toward how the sales tax was arranged. In regard to how the sales tax may affect their customers, she and Payne both feel responsible for explaining the added tax before surprising people with a higher-than-normal bill. “People can’t really believe it,” Leibfried said. “They question it. They’re not used to having to pay a sales tax.”