A proposed amendment to the state constitution prohibiting a state income tax was revised Wednesday to incorporate a ban on increasing sales taxes as well.
The addition of language to freeze state and local sales taxes was proposed by House Speaker Emeritus Jimmy Naifeh in the House Finance Subcommittee. His amendment was supported all five Democrats on the panel, plus Republican Reps. Steve McDaniel of Parkers Crossroads and Dennis “Coach” Roach of Rutledge.
The Naifeh amendment declares that state and local sales tax rates will be frozen effective Nov. 4, 2014, the day of the election that Tennesseans would be voting on any constitutional amendment.
Under current law, the state sales tax rate is 7 percent and local governments may add up to 2.75 percent local sales tax, for a 9.75 percent total. Naifeh said his proposal would allow any local government not now levying the maximum local tax to raise their rate to the maximum by Nov. 4, 2014. But at that point, the combined state and local sales tax maximum would be frozen permanently at 9.75 percent.
“I think it’s just common sense…Where we are right now is having the highest sales tax rate in the country,” said Naifeh. “We do not need to raise taxes on people who can afford it the least….Were are right ow the highest s tax state in the country. We do not need to raise taxes on people who can afford it the least.”
House Finance Committee Chairman Charles Sargent, R-Franklin, moved to table, or kill, the Naifeh amendment. That motion failed on a 7-5 vote. All vote to kill the amendment came from Republicans. The panel’s five Democrats, along McDaniel and Roach, voted to keep it alive.
Sargent said Naifeh was inappropriately mixing two different issues.
“I probably do not have a problem with limiting the sales tax, but I think that, probably, it ought to be done on a different bill,” Sargent said.
The original proposal, SJR18, has already been approved 28-5 by the Senate, applying only a prohibition on any state income tax except the Hall income tax on dividends and bond interest that already exists.
If the Naifeh amendment stands through other House committees, the measure would then return to the Senate for concurrence on the sales tax ban provision.
The House sponsor of the resolution, Republican Rep. Glen Casada of College Grove, at one point said he was considering postponement of a final subcommittee vote after Naifeh’s amendment was adopted. But he wound up putting it to a vote anyway and the subcommittee approved the amended version 7-6.
Voting for the amended version in the subcommittee were Democratic Reps. Lois DeBerry of Memphis, Craig Fitzhugh of Ripley, Naifeh, Tindell and Shaw, along with McDaniel and Roach. Six Republicans voted against the amended version – Reps. Kevin Brooks of Cleveland, Mike Harrison of Rogersville, Curtis Johnson of Clarksville, Judd Matheny of Tullahoma, Gerald McCormick of Chattanooga and Sargent.
If approved by the 107th General Assembly in the current legislative session, the amendment would have to be approved again by the 108th General Assembly, which begins in 2013, then would be subject to a statewide referendum in the 2014 general election.