Tax Equity, KHRA Funding Major Issues for 2008

Kentucky legislators said tax relief for the horse industry and dedicated funding for the Kentucky Horse Racing Authority will be prominent issues when the state General Assembly convenes in 2008.

Democratic Reps. Susan Westrom and Royce Adams plan to file the tax equity bill, which has failed to pass in recent years. The legislation would remove the tax on feed, fencing, and equipment used in the horse industry; participants in other forms of agriculture aren’t charged the 6% sales tax.

The legislation, supported by the Kentucky Equine Education Project, was stymied this year by the length of the General Assembly session. During “off” years, which feature shorter sessions, tax issues must pass by a two-thirds supermajority. That’s not the case in 2008.

Westrom announced her intentions during a Sept. 13 meeting of the Interim Joint Committee on Licensing and Occupations.

“I will be asking for everyone’s support in this room,” she said.

During the meeting, Republican Sen. Tom Buford discussed the 6% tax on horses purchased in Kentucky. The law was changed to eliminate the tax on out-of-state buyers; previously, they had a 30-day grace period to ship horses out of the state to avoid the tax. Kentucky residents, however, continue to pay the 6% sales tax on purchases.

Buford said the state must weigh the several millions of dollars it gets from the tax versus potential economic growth valued at much more.

“We take the most expensive horses and deliver them out of Kentucky,” Buford said. “If the horses stayed here, they would produce 20% (in revenue) rather than 6%. We have handcuffed ourselves.”

Republican Sen. Damon Thayer said a tax cut for horse farmers would cost the state general fund $5.5 million to $6 million a year.

As for the KHRA, Thayer said the legislature must come up with dedicated funding so the organization can carry out its mission and responsibilities. A state audit released earlier this year suggested the KHRA isn’t properly funded or staffed.

“It’s really embarrassing and borderline pathetic,” Thayer said of KHRA funding. “We’re supposed to be the horse capital of the world, but the General Assembly provides barely enough to keep the authority open.

“The authority can’t effectively test for (equine) drugs but must regulate. If that’s the case, the General Assembly should come up with the money to properly regulate the sport. We have got to make a major stand during the 2008 session for funding the racing authority.”

The Sept. 13 meeting marked the first time the Interim Joint Committee on Licensing and Occupations dedicated a full session to the horse industry. The group also discussed auction integrity and expanded gambling.

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