Deputy tax chief slams Musgrove idea

Published 12:00 am Friday, February 8, 2002

[02/08/02]While insisting Gov. Ronnie Musgrove’s plan to increase tax revenue without increasing rates won’t work, Lester Herrington said in Vicksburg Thursday the Tax Commission has a plan that will.

On Jan. 25, Musgrove proposed having large businesses that collect sales taxes pay their collections weekly instead of monthly. He said getting the money sooner would raise $100 million toward a $148 million Medicaid budget shortfall.

Lawmakers have rejected that plan, but not before state Tax Commission Chairman Ed Buelow said it would raise about half of Musgrove’s estimate.

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Herrington, deputy tax commission chairman, spoke at the Vicksburg Rotary Club after Buelow canceled.

“We don’t have the capability … to do that,” Herrington said of additional electronic filing of sales tax receipts.

He also said going from 12 payments a year to 52 creates substantial burdens on both the taxpayer and the agency. A compromise idea is moving forward in the Legislature, but not related to the Medicaid deficit.

As Herrington explained it, businesses owing sales, use and withholding taxes averaging $20,000 a month or more would, starting in June 2003, pay 75 percent of what they expect to owe for a month by the 25th of each month. As an alternative, they could pay 75 percent of what they actually owed in the preceding year, Herrington said.

The advantage to the state would be having June collections to spend in June, instead of a one-month lag.

“It is the least problem as far as the taxpayer is concerned and the tax commission because we only have to deal with one payment and the taxpayer will only have to deal with sending in one estimated payment,” he said.

After the estimated payment, Herrington said, businesses would pay the remainder by the 15th of the month for withholding and the 20th of the month for sales and use taxes.

“They passed this measure out of the House (of Representatives) this week … its gone to the Senate for consideration,” he said. “I don’t have any idea if this is going to be the end result, but it is something that is on the table.”

To shore up Medicaid, lawmakers are pursuing a different plan, diverting money from the Tobacco Trust Fund created as a reserve to generate interest and dividends to be spent for health-care purposes.