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Senate debates taxing taxi and limo fares to offset education property tax; amendment and close floor action push bill to third reading
Summary
Senate Bill 205, a proposal to repeal certain sales-tax exemptions for intrastate transportation services (including limousines, taxis and hired buses) to replace property-tax increases for school building funds, drew extended debate over fairness, fiscal impact (~$480,000), and burden on drivers; an amendment regarding taxis/limousines was adopted and the bill was placed on third reading with a divided vote.
Senate Bill 205, introduced by Senator Lyle Hilliard, would repeal several sales-tax exemptions that have historically shielded certain intrastate transportation services — notably limousine, taxi-cab and hired bus services — with the aim of generating revenue that could reduce a planned $4.1 million property-tax increase for school building funds.
Hilliard told the Senate the bill came from a task force and revenue study and said the bill would raise "about $480,000, not quite a half a million dollars" in the first year. He framed the measure as part of a multi-year effort to treat longstanding exemptions as fairness issues and to shift some revenue away from property taxes.
Floor debate focused on practical and equity concerns: Senator Black warned it would burden small drivers who would have to collect and remit sales tax and said many taxi drivers operate on thin margins. Senator Blackham and others cited committee testimony that roughly half of taxi trips were contract work paid by state agencies (which would remain exempt) and asserted that only a minority of fares come from higher-income riders. Opponents argued the bill disproportionally affects lower-income riders and small operators, while proponents said state contracts would not be subject to sales tax and that the exemption landscape has long been inconsistent.
During debate senators considered and then approved language changes in committee returning taxi and limousine services to the bill's scope; a floor motion to delete the taxi exemption and reinstate the original language passed on the floor by voice and standing call. A subsequent roll-call to place the bill for third reading produced a divided result as announced on the floor. The bill was placed on the third-reading calendar for further action.
Why it matters: The measure seeks to shift a modest amount of revenue by changing who pays sales tax for certain transportation services; for small drivers and low-income riders, the bill raises both practical record-keeping questions and distributional concerns. The measure is also tied to the broader debate about replacing property-tax increases with revenue from repealed exemptions.
Next steps: SB 205 was placed on the third-reading calendar after the amendment and divided floor action; any final enactment will depend on subsequent third-reading votes in the Senate and action in the House.
