A New Sales Tax on Services Would Further Burden Small Business Owners

Natalie Robinson, Indiana State Director for the National Federation of Independent Business, testified in front of the House Ways and Means Committee regarding HB 1083, the egregious expansion of sales tax to services. Robinson explained how the bill would negatively affect NFIB’s hard working and job creating entrepreneurs. NFIB represents more than 10,000 small business owners across Indiana.

“While we applaud lawmakers for passing a measure out of the House to cut business personal property taxes, we are extremely concerned with the proposal that would lower the sales tax rate one point by expanding Indiana’s sales tax to services. It’s imperative that lawmakers understand that this new tax will disproportionately impact smaller businesses. This expansion would create not only an administrative burden, but an added increase in expenses for Hoosiers across the state. Small business owners are also concerned with the potential added increase to their bottom line in the form of services for accounting, legal, financial, insurance and payroll,” said Natalie Robinson, NFIB State Director in Indiana.

Robinson told lawmakers that the bill would create a burden on Indiana small business owners who are trying to survive the pandemic and grow and compete with big business. A service tax on small business owners right now would discourage Indiana’s economic growth and punish the people who have seen the most closures this year – mom and pop Main Street businesses.

A recent NFIB survey shows that inflation continues to be the biggest problem for our small business owners. That means every time a small business owner is forced to pay more for something – they have to increase costs somewhere else. If Indiana extends its sales tax on services, it will result in higher costs for Indiana consumers.

Let’s be clear: small business owners don’t want to make it harder for their customers. They don’t want to raise prices by passing those unnecessary costs onto their consumers. That’s where Indiana lawmakers can help: by rejecting added taxes for small business owners.

“As small businesses try to recover after almost two years of significant financial distress and business disruptions, the last thing they need is an expansion on sales tax to service. Their reward for surviving these difficult times should be the opportunity to grow what they’ve fought so hard to maintain and preserve, not cause more business challenges. Now is not the time to expand sales tax on services which would result in increased costs for both small businesses and consumers,” Robinson told lawmakers.