The Wichita Business Journal reported in today’s edition that the Wichita Chamber of Commerce is beginning what will likely be a multi-year effort to repeal the personal and business income taxes in Kansas.

According to the Biz Journal article Joan Wagnon, Kansas Secretary of Revenue, says the change would lead to a major increase in sales taxes. She told the Business Journal the idea is not practical because it would require a dramatic increase in sales tax collections.

Wagnon has blamed tax exemptions and cuts enacted since 1995 for the state’s current budget woes. She says tax exemptions and cuts cost the state $1.2 billion in FY 2009 revenue.  But Department of Revenue and Legislative Research analysts responsible for the data acknowledge the calculations are static, making no compensation for increased economic activity, and higher tax revenues, resulting from the tax reductions.

State General Fund (SGF) receipts increased 40 percent ($4.2 billion to $5.9 billion) from fiscal years 2001 to 2008, including an 83% increase in taxes paid by businesses.  If the State had also collected the $1.1 billion Wagnon says were ‘lost’ in FY 2008, total tax receipts would have increased 66% rather than 40%.

Jason Watkins, lobbyist for the Wichita Chamber of Commerce, says the Chamber recently heard from Johnathan Williams, co-author of  “Rich States, Poor States,” an annual publication by the American Legislative Exchange Council ranking states’ business competitiveness. The study says states with lower income taxes are more appealing to businesses which then start or expand operations and create jobs and tax revenue.

“Jonathan pointed out that it’s the states that don’t have corporate or personal income taxes that have weathered the economic storm pretty well,” Watkins said in a phone interview today. “That got the attention of the chamber.”

“The chamber’s number one goal is to create an environment that’s business friendly. That’s the kind of environment that’s going to generate revenue and fund state government,” Watkins said.