Miss. tax reform bill faces deadline Tuesday

JACKSON, Miss. (WDAM)- A bill that would phase out the state income tax is approaching a Tuesday deadline in the Mississippi Senate.

House Bill 1439, which passed the House in February, would phase out the state income tax while raising the sales tax from 7% to 9.5%. Taxes would also be increased on the sale of items such as cigarettes and alcohol.

According to Sen. Joey Fillingane, eliminating the the state income tax could mean extra costs in other sectors in the future.

“You can’t do away with something and not look down the road to see how that hole is going to be filled if we expect the state to still provide services like teachers in our public schools and people giving COVID vaccination shots, the Department of Public Health,” said Fillingane, a Republican representing District 41.

Fillingane says that revenue loss from eliminating or reducing the income tax would need to be supplemented somewhere else.

“A certain amount of that can be absorbed just with the growth in, you know, what sales taxes are being paid and these sorts of things,” Fillingane said. “So, if you’re going to take $2.5 billion out of the $6 billion that we typically decide how to spend in the state, you’ve got to fill it with something. Just the natural growth is not going to fill that gap. So, you either have to cut services by that amount, which I don’t think anyone wants to do, or you have to find an alternate revenue source.”

Unlike nearby states such as Texas and Tennessee, Fillingane says Mississippi does not have some of the same resources to make up for the loss of revenue.

“Unfortunately, in a state like ours where you don’t have a ton of tourism yet, we’re working on it but it’s not there yet, and we don’t have a lot of oil and gas that we pump out of the ground,” Fillingane said.

He says the legislature would have to be deliberate and thoughtful in finding another source.

“We have to look at what do we have and what do we produce and what is the best method for collecting a fair amount of tax,” Fillingane said.

According to Fillingane, the senate will look at different alternatives than those written in HB 1439.

“There are different approaches that we’re going to be looking at,” Fillingane said. “But I think two things. Number one, everyone agrees that we would love to do away with the income tax, for the most part, but we also want to do it in a very responsible, thoughtful way so that we don’t end up having unforeseen circumstances of, you know, doing too much too quickly.”

He notes what some of those alternative methods could be potentially.

“One alternate revenue source is the internet sales tax as we’ve just begun collecting that over the past year and a half…,” said Sen. Fillingane. “And hopefully as businesses continue to find Mississippi an attractive place… you know, as you get more people in buying more things, paying more sales taxes, that may provide the opportunity to begin slowly phasing out the income tax.”

As of Monday evening, HB 1439 remains in the Senate Finance Committee. It would have to be passed by the senate by adjournment time Tuesday night or the bill will die.

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