Kentucky Governor's Decision to Tax Gold and Silver Despite New Law

Andy Beshear's Controversial Move

Andy Beshear, the Governor of Kentucky, has made a decision to persist in collecting sales tax on the sale of gold and silver. This is despite the introduction of a new law that repeals the levy and an attorney general's opinion that his line-item veto of the provision is unconstitutional. Only five other states in the U.S. impose a sales tax on gold and silver.

Introduction of the Bill

Representatives Steven Doan and John Hodgson initially proposed a standalone bill to repeal the sales and use tax on gold and silver bullion. This was later incorporated into House Bill 8 (HB8), a comprehensive revenue and tax bill. The provisions in HB8 define “bullion” as bars, ingots, or coins made of gold, silver, platinum, palladium, or a combination of these metals. These are valued based on the metal content and not its form and are used, or have been used, as a medium of exchange, security, or commodity by any state, the United States government, or a foreign nation. The House approved the bill with a vote of 87-9, and the Senate also gave its approval with a vote of 34-0.

The Governor's Veto

Governor Beshear signed the bill but used a line-item veto to eliminate the sales tax exemption for gold and silver. He justified his action by stating that if one owns gold, they can afford to pay sales tax, as tangible goods are the primary basis of the sales tax.

Unconstitutional Veto?

The leadership of the House and Senate deemed the veto unconstitutional. According to Sec. 88 of the Kentucky Constitution, the governor only has line-item veto power on appropriation (spending) bills, not revenue bills. Instead of merely overriding the veto, the Republican leadership sought to make a political statement and asked Attorney General Russell Coleman to issue an opinion on the constitutionality of the veto. He agreed with the legislature's assessment.

Beshear's Stand

However, Governor Beshear dismissed the AG's opinion and instructed the Department of Revenue to collect the sales tax despite the law technically being in effect. James Hatchett, a spokesperson for Beshear, referred to the first line of HB8 to justify the governor's action. He stated that the legal question boils down to whether or not a single appropriation in a revenue bill makes the bill an "appropriation bill."

Implications for Gold and Silver Dealers

The National Coin and Bullion Association highlighted the predicament for gold and silver dealers and buyers in Kentucky. Retailers now have to decide whether to collect sales tax, which could result in consumer backlash and potential lawsuits for overcharging, or not collect it and risk penalties or interest from the Kentucky Department of Revenue. Until there is a legal resolution, which will likely require a lawsuit, Money Metals plans to charge sales tax to Kentucky customers.

Bottom Line

This situation presents a complex legal and political issue. The governor's decision to continue taxing gold and silver, despite a new law and an attorney general's opinion, raises questions about the interpretation of the constitution and the balance of power. What are your thoughts on this matter? Share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.