INDIANAPOLIS (AP) -
Hoping to entice Indiana Senate Republicans to support a roads funding plan
that boosts gas and cigarette taxes, a House committee on Thursday added a
proposal to cut the state’s income tax rate by 5 percent over the next eight
years.
The House Ways and
Means Committee voted 14-7 to advance the plan to the full House. The
proposal has the backing of House Republicans, but it’s faced criticism from
GOP Gov. Mike Pence and conservative groups for raising Indiana’s cigarette
tax by $1 a pack while tacking an estimated 4 cents onto the state’s 18
cents-a-gallon gas tax. Senate Republicans have been advancing a plan
supported by Pence that would increase highway spending through steps that
include drawing down the state’s surplus and borrowing money.
To garner support
among Senate Republicans, the House committee added the income tax cut -
reducing it in four steps from next year’s rate of 3.23 percent to 3.06
percent in 2025.
House Speaker Brian
Bosma said the House proposal would bring in more revenue for the state
until the income tax cut was fully implemented after eight years. He
continued to maintain the House plan was a better long-term solution for
directing more money toward infrastructure needs.
“This is truly
needed,” Bosma said. “In fact even those who are publicly opposing it have
told me privately - some of them - that this is the right thing to do. They
just don’t want to do it in an election year.”
Committee Democrats
opposed the income tax change, saying it would make state government more
reliant on sales tax revenue, which fluctuates more during economic
downturns.
“We’re really
giving up a stable income for the state for something that’s too fluid,”
said Rep. Terry Goodin, D-Austin.
Pence, who is
facing a tough re-election campaign this year, has argued that tax increases
aren’t needed to boost road funding.
Senate President
Pro Tem David Long said he didn’t think the road funding bill was the proper
place for an income tax cut and wasn’t sure that step was prudent for the
state’s finances.
“The income tax is
a separate discussion as far as I’m concerned,” he said. “I think that’s put
in there to try to get more support for the bill - and I understand that.”
The conservative
group Americans for Prosperity has been running radio advertisements
critical of the House proposal and said Thursday’s changes only represented
a promise of future tax cuts.
House Democratic
leader Scott Pelath disparaged Republicans for only releasing the proposed
income tax changes to the road funding bill Wednesday night. “I think your
plan is very complicated and hard to defend, and the public is very
uncertain about it,” Pelath said.