INDIANAPOLIS — Indiana could lower its sales tax but apply it to more services and generate enough revenue to eliminate property taxes on homeowners, an interim panel of lawmakers was told Wednesday.

Several proposals for eliminating property taxes completely or at least on homeowners were met with skepticism by the interim legislative commission on taxes. They included plans to replace the revenue with sales or income tax increases, and one to increase numerous other taxes and fees.

But although the panel had questions about the proposals to expand the sales tax on more services, at least two top lawmakers — House Ways and Means Chairman William Crawford, D-Indianapolis, and Senate Tax Chairman Luke Kenley, R-Noblesville — gave it a warm reception.

Crawford called it intriguing, and Kenley said it may be “the 21st-Century thing to do.” The two similar proposals were presented by Republican Sens. Mike Young of Indianapolis and Brent Waltz of Greenwood.

Under one plan, the state's 7 percent sales tax rate would be lowered to 5.5 percent and be applied to all services except medical and legal. Young and Waltz said that would raise enough money to replace $2.2 billion in property taxes that homeowners pay.

Of more than 160 services, Indiana applies the sales tax to only 23, including cable and satellite television, utilities and some phone services. Under the Young and Waltz plans, a lower sales-tax rate would be applied to almost all other services, including such things as haircuts, dry cleaning and auto repairs.

Under the second plan, the sales-tax rate would be lowered from 7 percent to 4.5 percent and be expanded to all services, including medical and legal. Young said that also would bring in $2.2 billion that could be used to eliminate property taxes on homeowners.

Young said only eight states apply their sales tax to fewer services than Indiana, and several apply it to more than 100 services. He said the proposals would broaden the tax base and eliminate property taxes on homeowners, making it easier for families to make mortgage payments.

Young and Waltz say their plans also would reduce foreclosures, and should lead to a boom in the real-estate and home-renovation markets.

The General Assembly approved a property-tax reduction and restructuring plan last session that proponents, including Gov. Mitch Daniels, said would provide significant and lasting relief and reform. Kenley said Wednesday that it was probably the boldest property tax-relief plan in the nation.

It included raising the sales-tax rate from 6 percent to 7 percent, and this year apply the extra revenue, along with money from horse-track casinos, to provide increased homestead credits to lower homeowners' property tax bills.

According to the Daniels administration, of 55 counties that have sent out property-tax bills so far this year and eight that are about to, the average reduction in homeowners' bills is about 39 percent. Some counties lowered bills further by increasing local option income taxes. In four counties so far — Fulton, Parke, Wabash and Wells — some homeowners will pay no property taxes this year.

The plan passed last session also will cap property-tax bills on homeowners at 1 percent of their home's assessed value by 2010, with limits of 2 percent on rental and agricultural property and 3 percent on business property.

But some citizen groups have called for complete repeal of property taxes, or at least those on homeowners. Legislative leaders decided at least to explore the idea of eliminating property taxes on homeowners.

Bill Waltz, a lobbyist for the Indiana Chamber of Commerce, suggested that homeowners should at least share some of the property-tax burden. And he said the Young and Waltz plans would be a little more appealing to businesses if some of the money was used to reduce their property taxes.

Kenley said that could be a possibility, but also said many big businesses already get large tax exemptions. And although he thought homeowners should still pay some property taxes, he found merit in the concept of the Young and Waltz plans. But he said medical services should be exempted from sales taxes in any such proposal.

He said an expanded sales tax approach was unlikely to pass in the next session, but should get a closer look.

“I like the lower rate and I like the equity of it,” he said. “If it's a true sales tax, that means a tax on consumption. Consumption used to be 75 percent (on) goods, and now its 40 percent goods and 60 percent services, so our society has changed to what consumption really is.”

When told later about the proposals, Sen. Vi Simpson, D-Bloomington, said they have had negative impacts when tried in other states. She said the sales tax was more burdensome on those who make less money.