OKLAHOMA CITY – Two southwest Oklahoma lawmakers are confident a Senate panel will develop a tax reform plan that addresses meaningful short- and long-term options.
Sens. John Michael Montgomery (R-Lawton) and Brent Howard (R-Altus) are part of the committee charged with examining ways to reform Oklahoma’s tax system, including taxes on groceries, gasoline and income.
The panel has held two meetings so far and is scheduled to meet at least two more times before submitting its plan.
“We’re looking into the numbers for each of these and what can be implemented in an expeditious manner and what can be implemented on a family level for some immediate relief,” Howard said.
Total elimination of the personal income tax would cost the state $3.77 billion a year, which Howard said is a non-starter since the state Legislature would have to replace that revenue.
The Senate committee has discussed short-term exemptions for gasoline and grocery sales taxes. A grocery tax exemption for one year would cost the state an estimated $305 million in revenue, Howard said. Other options are a six-month grocery sales tax exemption at a cost of $150 million and a one-month gasoline tax holiday at a cost of $30 million.
“It could be a perpetual holiday if we’re not careful how it’s implemented,” the senator said. “We have to be cautious. We need to see cuts that are forward thinking with supply chain issues in mind. I don’t think we’ll have a consensus, but it will be a plan for a short term shot-in-the-arm relief.”
Howard and Montgomery hesitated to say that any plan would have significant relief for Oklahoma families. After doing his calculations, Howard said families would gain $1.75 per week based on a median annual income of $53,000 and a quarter-percent reduction in income tax.
“It (income tax relief) is more of a political statement against other states than it is relief for the average Oklahoma family,” Howard said.
At the same time, Montgomery questioned whether temporary tax relief “is worth the headache” if families won’t experience significant gains. He said his preference is to devote these ongoing discussions to “broader tax reform” that can be addressed in the next legislative session.
“The (temporary) benefit to families depends on how long we do the exemptions for, if it’s one month, three months, six months. It (gas tax relief) also comes down to how much is consumed,” he said. “The short term things will not be life altering. But longer term options, that’s where you’ll see the bigger impact.”
The House of Representatives has already adjourned from its tax reform special session, but the Senate remains in session, which creates a problem of getting tax reforms passed, Montgomery said. It’s possible, he said, that Gov. Kevin Stitt would call lawmakers into another special session during August to approve tax reform proposals from the Senate.
Senate President Pro Tempore Greg Treat announced his appointments for the tax reform working group last week.
“We’re committed to a serious, mature conversation about tax reform, conducted in a thoughtful way,” Treat said. “Oklahomans are facing economic challenges as a result of the failed policies of the Biden administration. Our response must be methodical, taking into account not just the immediate picture, but how proposed changes could impact our state in the long run.”
Treat (R-Oklahoma City) said Sen. Dave Rader (R-Tulsa) will serve as chair for the panel, which will also include Sens. Micheal Bergstrom (R-Adair), Bill Coleman (R-Ponca City) and Julie Daniels (R-Bartlesville). Senate Majority Floor Leader Greg McCortney (R-Ada) and Senate Appropriations Chairman Roger Thompson (R-Okemah) will serve as ex-officio members of the working group.
“The Senate is absolutely committed to meaningful discussions on tax reform, and the members I’ve chosen for this working group will conduct an in-depth examination of tax reform and potential impacts on our citizens and our state as a whole,” Treat said. “Our focus is on policy over politics, and I appreciate our members’ willingness to serve as we conduct a thorough, thoughtful study.”