Majority leaders pre-file bill to reduce overall state sales tax

News release from Rep. Gerald McCormick:
(NASHVILLE) — House Majority Leader Gerald McCormick (R-Chattanooga), along with Senate Majority Leader Mark Norris (R-Collierville), filed legislation this week that calls for Tennessee’s sales tax rate to be cut. The intent of House Bill 1, filed Thursday by Republican leadership, is to reduce the tax rate from 7 percent to 6.75 percent.

“I filed this legislation in an effort to put an idea out on the table as we continue to discuss tax reform, and hopefully find a solution that will decrease taxes for all Tennesseans and help economic growth throughout the state,” said the House Majority Leader.

State revenues have come in below projected totals over the last couple years, causing state budgets to be tightened, and GOP leadership feels it is time to have a meaningful and thoughtful discussion on the matter.

“Reducing the sales tax rate is just a small part of a much broader discussion on important tax reform issues that I look forward to having in the upcoming months,” concluded Leader McCormick.

In last year’s budget, Tennessee collected approximately $7.2 billion from sales tax revenue, according to the Department of Revenue.

Note: The bill is only one paragraph. The caption is broad enough to do many things by amendment — as, for example, repeal some existing sales tax exemptions to make up the revenue loss.

WKRN-TV picks up on the notion of repealing sales tax exemptions and include a Haslam comment as well as likening the situation to former Gov. Don Sundquist’s call for tax reform shortly after he won reelection to a second term. Excerpt:

Haslam told News 2 he had not spoken to the two leaders about their statement, but he said he had exchanged emails with them.

“If we are going to talk about changing taxes, I think we need to talk about everything, everything from the expense structure to how we pay taxes in Tennessee,” said Mr. Haslam. “That broader conversation I think was the message, which I welcome. So I think the conversation begins with what is the right expense level for the state and then how do we bring in the corresponding revenue.”

Conservative commentator Steve Gill, who was one of those leading the three-year fight against implementing a state income tax during the late 1990s and early 2000s, saw the language as setting the stage for removing sales tax exemptions.

“Under the surface, you are hearing about legislators carving a little bit off the Hall Tax, carving a little off the sales tax, and using that as our ‘we’re cutting taxes’ to slip in a tax increase,” Gill told News 2. “If they really wanted to do this before the campaign, not right after the election. It is classic bait-and-switch and Tennesseans should not tolerate it.”

How Tennessee lawmakers plan to have “a broader conversation about tax reform” in the upcoming session has not been determined, but such words as “tax reform” alongside of “cutting taxes” has not been heard since those noisy days of the income tax protests more than a decade ago.