Bill To Cut Inventory Taxes Has Some Local Government Officials Worried

Some lawmaker are pushing for legislation to reduce Mississippi’s inventory tax to stimulate business, but some local governments are concerned it could take tax revenue away from them. MPB’s Stephen Koranda reports.

Reducing the state’s inventory tax would put Mississippi on a better footing to compete with surrounding states, says Blake Wilson with the Mississippi Economic Council.

“We’re one of only a handful of states that have this very old fashioned tax. This is based on a different kind of economy. This is a major disincentive to Mississippi because our surrounding states don’t have it. We’ve got to tear down this wall that’s damming up economic development.”

Inventory taxes help to fund city and county governments. Hernando Mayor Chip Johnson says reducing the inventory tax could cost his city around 200 thousand dollars in revenue.

“Which means I’ll either have to fire around 6 policemen, or cut some other services or raise taxes on my people.”

The plan, which passed the Senate Wednesday, would reduce the inventory tax by 50 percent over a five year period. Johnson believes the change won't help attract new business.

“We already have the ability in state law to give inventory tax exemptions to corporations to create jobs. This is going to include things like Kroger and Wal-Mart. Those people are going to come whether they get their exemption or not if they follow the rooftops. So those businesses aren’t going to use this incentive to locate, they’re just going to use this a windfall.”

Officials pushing for the change say it won’t affect local governments, because any lost revenue would be made up with state dollars. Due to the slow economy, the changes wouldn’t take effect immediately. The tax credits would only start after the state saw positive economic growth for three consecutive years.