Pence Push for Sales Tax Exemption Falls Flat

Feb 20, 2015

Gov. Mike Pence says he's still hoping lawmakers will consider some of his sales tax exemptions, some of which are considered too drastic by legislators of both parties.
Credit File

Governor Mike Pence says he still hopes to alter a major sales tax exemption for Hoosier businesses after House lawmakers stripped out a change to the exemption from the governor’s tax legislation.

One of the biggest pieces of Governor Pence’s tax simplification bill was the elimination of what’s called the “double direct” test for determining business sales tax exemptions.  The double direct test is a very specific metric for determining what items are exempt from the sales tax. 

Pence sought to broaden it, allowing businesses to avoid the tax on more things.  But legislative fiscal analysts projected a revenue loss that topped two hundred million dollars a year…a price tag that forced lawmakers to reject the idea in committee.  Pence says he hasn’t given up on the concept.

“This leads to a lot of disputes and we can make it easier on taxpayers,” Pence said.

Speaker Brian Bosma says legislative leaders made it clear before the legislative session even began that this was not the time for big tax cuts.

“So, we’re still looking at the issue but it is…the larger the price, the tougher it is to reach the goal,” Bosma said.

Pence says the tax simplification bill would be a major accomplishment even without eliminating the double direct test.