Some See Tax Increases in Pending Legislation

Note: This is a column written for the Knoxville Business Journal
While hailing bills that cut taxes, state legislators are quietly pushing tax increases. At least, that’s the tale told by folks who would be paying the levies involved.
Proponents say they are merely correcting oversights. Deputy Comptroller Jason Mumpower says SB3296 may be seen as a “technical correction of a technical correction.” The measure undoes a change in the property tax treatment of solar energy companies that was part of the 2010 “technical corrections” bill from Gov. Phil Bredesen’s Department of Revenue.
“It very unusual that this was placed in the technical corrections bill to begin with,” Mumpower said, noting that such legislative packages generally focus on state levies, not local property taxes. Solar power enjoys a 100 percent sales tax credit and a 100 percent franchise and excise tax credit, Mumpower said.
His bill would tax solar installations similar to other “green energy” sites. The Tennessee Solar Energy Industries Association counters that the measure “would increase the appraised value of solar property (for tax purposes) from .5 percent to 33 percent of the original cost, resulting in an incredibly large and burdensome tax increase.”

The industry employs about 6,500 Tennesseans, the group states in a news release, and if “this bad legislation is approved, small solar businesses will begin to lay off workers, manufacturers will see less demand for their products and fewer Tennesseans will be installing solar systems.”
At least nine businesses qualify for the tax treatment, but Mumpower says they haven’t really used it yet — the law takes effect this year — so the measure isn’t really a tax increase.
Another curiosity exists in the squabble. Former Revenue Commissioner Reagan Farr is now vice president and chief operating officer of Silicon Ranch Corp., a solar energy company. Bredesen, an investor, is its chairman.
Mumpower says he’s not accusing Farr acting to assure favorable tax treatment of the industry that he joined when leaving office. But he’s not disputing the proposition, saying “people can draw their own conclusions.”
Farr told the Nashville Business Journal that Silicon isn’t applying for the tax break and the 2010 law was pushed to develop a fledgling industry. Suggestions to the contrary, he said, are just “politics from a very political comptroller.”
Another tax dispute is HB3319, by Sen. Doug Overbey, R-Maryville, and Rep. Richard Montgomery, R-Sevierville.
This one relates to a federal judge’s ruling that the hotel-motel tax is applied to what the hotel receives when a room is rented, not on the price the consumer pays for the room through websites.
The bill would have the state’s hotel-motel tax apply to the “consideration paid by the public.” Without the adjustment, Montgomery told a House subcommittee, there will be a “dramatic” loss of revenue for local governments.
The Interactive Travel Services Association declares in a news release that the “travel tax” increase will negatively impact “the attractiveness of Tennessee as a tourist destination.”
There you have it. Lawmkers are ready to repeal the inheritance tax, cut reduce the sales tax on food and, maybe, exempt more people from the Hall income tax. But they stand accused of tax increases as well.

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