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Senate Finance Committee Advances $439.4M Tax Cut Proposal
Jackson, Miss.—A bill which would reduce the income tax, cut grocery taxes, and provide for a six-month gas tax suspension cleared the Mississippi Senate Finance Committee today.
Amended House Bill 531 includes no tax increases or growth triggers and would be fully implemented in eight years. The proposal includes:
- An immediatereduction in the grocery tax from 7 percent to 5 percent, at a cost of about $118.4 million;
- A 2022 rebate of up to $1,000 for all citizens with tax liability, which totals about $130 million.
- A reduction of the 5 percent tax bracket over the next four years to 4.6 percent, at a cost of $136 million;
- The elimination of the 4 percent tax bracket over four years after the reduction of the 5 percent bracket is finally implemented, at a cost of $185 million; and
- A six-month suspension of the 18.4-cent gas tax, which totals about $215 million.
“Inflation is through the roof and Mississippians need help with household expenses now. The grocery tax cut, gas tax suspension, and rebate in the Senate’s proposal all provide direct and immediate relief to our citizens. A reduction in the income tax makes us very competitive with and lower than other states without compromising the budget,” Lt. Governor Delbert Hosemann said. “We have needs in the state, but we also have a surplus. We need to return money to taxpayers this year.”
If implemented, the Senate’s plan would eliminate about $439.4 million in recurring revenue from the budget by 2030 and would be the largest tax cut in Mississippi history. In 2016, the Legislature passed a bill phasing out the 3 percent tax bracket by 2022. The same legislation phased out the franchise tax on businesses over a ten-year period ending in 2028.
Revenue for the last fiscal year (FY 2021) and current fiscal year (FY 2022) are above projections, but budget analysts have advised revenues are likely buoyed by the significant federal recovery funds flowing into the state. This makes it difficult to discern how much revenue is one-time and how much is recurring.
Additionally, both the House and Senate have made recommendations for additional spending on necessities, including a $220 million-plus pay raise for teachers across the state. The Senate position accounts for these promises and the instability in the economy.
For more information about Lt. Governor Delbert Hosemann, visit www.ltgovhosemann.ms.gov.
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