Senators Want To Cut Sales Tax By 1.5 Percent

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(UNDATED) - Legislators aren’t done looking for ways to chop property taxes — or possibly eliminate them.

Republican senators Mike Young of Indianapolis and Brent Waltz of Greenwood have proposed eliminating residential property taxes by expanding the sales tax to cover services -- only doctors and lawyers would be exempt. That would raise enough money to not only wipe out your tax bill but cut the 7% sales tax to 5.5%.

Legislative leaders remain skeptical of taking property taxes out of the revenue mix entirely, even if the money can be made up. Kenley notes Young and Waltz's plan would leave businesses paying property taxes while homeowners don't. He says he'd be more inclined to use a services tax to cut the sales tax rate even further, to 4.5%, or to abolish taxes on business equipment.

Legislators last year authorized local income taxes to replace property tax revenue. This year's session cut taxes further, and capped residential taxes at 1% of a home's value.

Kenley says the changes lowered the average homeowner's bill by 39%, and says four counties reported the new income tax erased some homeowners' bills entirely.

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