Pub. 8 2019 Issue 6

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 8 T he 2020 Kansas Legislative Session is set to start Monday, Jan. 13, and if this past summer and fall interim committee meetings are any indication of the upcoming session, the legislature will have a lot on its plate. Even though members of the legislature went home in May, legislative officials and staff have been working hard through the summer and fall to study the major issues that will come before the legislature when it reconvenes in a couple of weeks. One major issue that was studied in the interim and that will be considered next year is the banking industry’s #1 priority: tax equity among competing lenders. This past fall, the Special Interim Committee on Financial Institutions and Insurance reviewed two pieces of legislation that the KBA introduced to address unequal tax policy between financial institutions who pay state income (privilege) tax and their competitors that do not. S.B. 238 would exempt from privilege tax the interest earned from any business loans, including agricultural loans. S.B. 239 would impose the privilege tax on credit unions with assets greater than $100,000,000 on interest earned on their business loans, including agricultural loans. Both bills were introduced with the premise of presenting an either-or approach: if the legislature is not willing to level the playing field by placing a tax on non-tax paying financial institutions, then it should look at reducing some of the tax burden on financial institutions that do. After hearing public testimony on Oct. 3 and presenting additional requested information on Oct. 29, the committee decided against recommending S.B. 239, ultimately killing the bill to tax large bank-like credit unions. The committee made no recommendation on S.B. 238, citing the need for more research and data to be collected. Senator Rob Olson, who chaired the interim committee and also chairs the Senate Committee on Financial Institutions, stated that he intends to hold hearings next session on S.B. 238 or a bill similar in concept. “This is an important issue that needs to TAX EQUITY LEGISLATION TO BE HEARD NEXT SESSION Alex Orel, KBA SVP Government Relations