A sales tax exemption on gold, among other forms of currency and bullion, will remain in place after a recently issued Kentucky attorney general opinion.

During session, a wide-ranging House Bill 8 mostly focused on the tax code added a sales tax exemption for currency and bullion.

Bullion includes bars, ingots or coins made of gold, silver, platinum, palladium or a combination of these metals that have historically been used as medium of exchange. Currency includes any legal tender made of gold, silver, platinum, palladium, other metal or paper money and is sold based on its value as a collectible item.

An attempted veto

Gov. Andy Beshear attempted to line-item veto the bullion and currency sales tax exemption, along with another part of the bill requiring the Department of Revenue to develop a tax amnesty program.

“I am vetoing this part because if you own gold, you can afford to pay sales tax,” Beshear wrote in his veto message. “Tangible goods are the primary basis of the sales tax. Other collectible goods are taxed as tangible personal property.”

But when the vetoed bill returned to the legislature, leaders didn’t bother overriding the veto. They said that Beshear didn’t have the right to line-item, or partially veto the bill, since it wasn’t an appropriations bill.

According to the Kentucky Constitution, the governor can only issue partial vetoes of appropriation bills, those that authorize using money from the treasury for a specific purpose.

Senate President Robert Stivers and House Speaker David Osborne promptly requested an opinion from Attorney General Russell Coleman on the matter.

The Office of the Attorney General agreed with Stivers and Osborne. The decision, written by Aaron Silletto, stated that House Bill 8 was a raising revenue bill, not an appropriations bill.

“So, if the bill primary deals with raising revenue – e.g., establishing new taxes, modifying tax rates, creating exemptions from existing taxes, and the like – it is not an ‘appropriation bill’ under Section 88,” Silletto wrote.

It does not focus primarily on spending public funds, like an appropriations bill would, he added.

Since governors cannot line-item veto revenue raising bills, the bullion and currency sales tax exemption will go into effect.

A failed diapers sales tax exemption

The final version of House Bill 8 did not include one seemingly popular provision, introduced by Democratic Sen. Cassie Chambers Armstrong.

The Louisville senator filed a bill to exempt diapers from Kentucky’s 6% sales tax.

Half of U.S. families struggle to afford diapers they need, according to the National Diaper Bank Network. Armstrong said this requires families to make tough choices about either risking the health of their child by reusing diapers or taking needed money out of rent and groceries budgets.

In a mid-January presser, Armstrong was optimistic about the diaper tax exemption.

“There’s a lot of bipartisan enthusiasm for eliminating the diaper tax,” she said. “I’m grateful that I believe everyone in this caucus has now signed on as a co-sponsor, as well as several members of the majority party, including those in leadership.”

However, the diaper tax never came to fruition. In a floor speech, Armstrong said she was “very disappointed.”

“After our revenue bill passes, our government will continue to be funded by the dollars of families who can’t afford to pay for diapers, and yet we’re collecting sales tax on that necessity,” she said.

The day after session ended, Senate President Robert Stivers, R-Manchester, explained revenue-raising measures have to start in the House, and since Armstrong’s standalone bill did not, it did not follow the constitutional process.

“To file a bill in the Senate is the lack maybe of seasoning for some members in the Senate,” Stivers said. “(That) caused that to reach its own demise.”

However, the broader revenue bill went to a conference committee, where Republican leadership could have added the diaper tax in a constitutional way if they had wanted.

Republican leadership expressed support for the exemption when it was originally filed, according to Herald Leader coverage.

“An exemption to the sales tax on diapers would benefit thousands of Kentucky families,” Armstrong said in a statement. “It had broad bipartisan support, and I was deeply disappointed that the conference committee did not include it in the final revenue bill. It is a shame that they prioritized a tax exemption on gold bars over the needs of our working families.”