Mississippi House approves major tax overhaul after hours of debate

The Mississippi House passed Senate Bill 3,095, a broad tax-reform package that will phase out the state individual income tax and shift revenue toward consumption taxes, by a final vote of 90 yeas to 26 nays.

The bill, described by supporters as the revised Build Up Mississippi Act and introduced to the House with a strike-all amendment, would phase out the individual income tax over roughly 11 years, raise the general state sales tax rate toward 8 percent (phased), immediately reduce the grocery sales tax to 5 percent, convert the current fuel sales tax to an excise structure that increases by 5 cents per gallon per year for three years, dedicate funds to transportation and create new credits and transfers including a $300 million transfer into a budget stabilization fund and a $100 million annual dedication from lottery proceeds to PERS funding. The chairman’s description said the plan also provides an additional $200 homestead credit for seniors 65 and older and disabled residents.

Why it matters: supporters said the plan shifts tax burdens away from wage income and toward consumption, delivers a substantial tax cut for many taxpayers and provides dedicated, long-term funding for transportation maintenance. Opponents warned the revenue shifts and tax cuts could create shortfalls for the general fund, increase costs for lower-income…