Sen. Frank Niceley has filed legislation that would use any new state revenue from out-of-state retailers to lower the current sales tax on groceries.
Niceley, R-Strawberry Plains, filed the bill (SB1424) Tuesday for consideration during the 2014 legislative session that begins in January. In an interview, Niceley said he adamantly opposes legislation pending in Congress that would authorize states to collect sales taxes from their citizens buying products over the internet or via mail order from companies located in other states.
But if the law is approved by Congress, the bill declares that the state finance commissioner will make an annual estimate of “surplus Internet tax revenue” and put that amount of money into the state budget for use in reducing the tax on grocery food.
Gov. Bill Haslam, House Speaker Beth Harwell and Senate Speaker Ron Ramsey all support the “Marketplace Fairness Act,” which passed the U.S. Senate last month but is stalled in the U.S. House, and have all indicated an interest in using some of the new revenue to reduce current state taxes.
If Congress allows states to collect sales taxes from Internet sales, Gov. Bill Haslam and leaders of the Tennessee Legislature say they would like to put some of the new revenue generated toward reducing current state taxes.
Haslam, House Speaker Beth Harwell and Senate Speaker Ron Ramsey all favor the “Marketplace Fairness Act,” as the pending legislation in Congress is entitled.
“If the bill becomes law, it will allow Tennessee to collect taxes that are already due, and hopefully we can use those funds to reduce taxes elsewhere for Tennesseans,” said Harwell in an emailed statement last week.
Haslam, asked last week if he would like to lower other taxes if the bill passes Congress, replied, “Sure.” But he added some caveats.
“No. 1, I’m of the don’t-count-your-chickens-before-they-hatch school and we’ve got a long way to go before they pass that thing in the House,” he said.
The Senate has approved the bill, which would require Internet retailers with gross sales of more than $1 million per year to collect sales taxes, with support of both Tennessee U.S. Senators, Lamar Alexander and Bob Corker. But it is stalled in the House, where many members of the Republican majority are cool — if not outright opposed — toward the idea.
“No. 2, we don’t really know what that number is” for how much new revenue would be generated for Tennessee by collecting taxes from Tennesseans when they buy online from out-of-state retailers.
The National Conference of State Legislatures has estimated that Tennesseans avoided $748.5 million in sales taxes on online purchases last year — about $400 million that would have gone to the state and the rest to city and county governments combined statewide.
But that doesn’t take into account the pending bill’s exemption for retailers with less than a $1 million gross and various other provisions.
And No. 3, Haslam said, there may be areas where the state should increase spending rather than cut taxes. The question, as he put it, is “Are there places where there’s something we’re not doing that we should be doing?”
Full story HERE.
Lt. Gov. Ron Ramsey on Thursday joined Gov. Bill Haslam in supporting the federal legislation requiring large out-of-state Internet retailers to collect sales taxes on purchases and said that U.S. Rep. Marsha Blackburn is “100 percent wrong” by calling it a new and unfair tax.
Further from the Richard Locker report: “She’s wrong on this. It’s not a new tax. And how can you say it’s unfair? It’s not a new tax and it is fair,” Ramsey told reporters.
Ramsey, R-Blountville, the speaker of the state Senate, said Tennessee could use some of the estimated $748 million it looses per year in uncollected sales tax on Internet purchases to reduce or eliminate other taxes like the “Hall” tax on interest and dividend income. “I’d love to take that money and reduce the Hall Income Tax. I’m in favor of eliminating it … but I think we could for sure get to where we eliminate it for people over 65.”
His remarks further illustrate how divided Tennessee Republicans are on the Marketplace Fairness Ac, which passed the U.S. Senate with bipartisan votes Monday but faces an uphill battle in the GOP-controlled House. Tennessee’s two Republican senators, Lamar Alexander and Bob Corker, voted for the bill, and Alexander is one of its leading proponents. But no Republican in Tennessee’s U.S. House delegation has come out in favor of it.
Blackburn, R-Brentwood, told the Chattanooga Times Free Press on Tuesday, “There’s nothing fair about the Marketplace Fairness Act” and, “We don’t need the federal government mandating additional taxes on Tennessee families and businesses.”
The U.S. Senate voted 69-27 on Monday– with Tennessee’s senators joining the majority — to give states the power to collect taxes on online purchases, discounting arguments that the legislation amounts to taxing the Internet.
“It’s a tax that is already owed,” said U.S. Sen. Lamar Alexander, a Maryville Republican and one of the bill’s primary sponsors. “It’s a tax that some people are paying and others are not, even though they owe it.”
U.S. Sen. Bob Corker, a Chattanooga Republican, also voted in favor of the measure.
“I applaud the Senate for passing this states’ rights bill that will give states like Tennessee the flexibility to collect the revenues that are due under current law if they choose,” Corker said in a statement released after the vote. “I think most Tennesseans would agree that we are fortunate not to have a state income tax, and to ensure that remains the case, it’s important our sales tax system works. Today’s vote is a step in the right direction in making sure local brick-and-mortar businesses and online retailers are on the same playing field.”
…In a floor speech shortly before the vote, Alexander portrayed the bill as matter of fairness and states’ rights because, he said, it allows governors and legislatures to decide whether they want to require out-of-state sellers to collect the tax and remit it to the state — something that in-state sellers already are required to do.
“This is common sense,” Alexander said. “This is fairness.”
Last year, Gov. Bill Haslam testified in favor of the legislation, telling a U.S. House committee that Tennessee is believed to be losing as much as $400 million each year in uncollected taxes on online purchases.
If collected, that money could be used to help pay for infrastructure improvements, mitigate the rising cost of higher education and even cut taxes, Haslam said.
Full News Sentinel story, HERE.
Known as an elder statesman among Tennessee politicians, U.S. Sen. Lamar Alexander easily snatched up all the House members he wanted to support his 2014 re-election campaign. But Chris Carroll reports that many of those same conservative allies are ambivalent or even critical of the former governor’s top legislative priority.
Alexander is shepherding an unusual bill for a keep-taxes-low Volunteer State Republican. The Marketplace Fairness Act would allow states to force Internet retailers to do what brick-and-mortar businesses have done for ages: Collect sales taxes on every transaction and give the money to state and local governments.
Or, in Alexander’s words, give states the option to get “a tax that is already owed.”
But leading fiscal conservatives, including U.S. Reps. Marsha Blackburn of Tennessee and Tom Graves of Georgia, describe it as the scourge of small-government advocates: a new tax.
“The last thing we should do is raise new taxes on hard-working Americans who are already struggling in the Obama economy,” Graves said last week. Meanwhile, Blackburn put it bluntly: “There’s nothing fair about the Marketplace Fairness Act.”
As the 72-year-old Alexander attempts to dissuade potential tea party challengers in his bid for re-election, in-state opposition to his pet bill may undermine claims that he can still get things done and satisfy an increasingly conservative Tennessee electorate.
“Is it a liability for Alexander? It’s not clear what the public thinks on this,” Vanderbilt University political science professor Joshua Clinton said. “As a challenger, you may get some traction in the Republican primary.”
Alexander has no challengers to date. To help keep it that way, he added every Tennessee Republican House member (except scandal-plagued U.S. Rep. Scott DesJarlais) to his campaign team late last year. So far they aren’t helping him on this one.
“We have no formal position on the legislation at this time,” said Tiffany McGuffie, a spokeswoman for U.S. Rep. Phil Roe.
The bill is expected to pass the Senate this week; earlier this year, a test vote garnered 75 supporters. But in the House, where a tea party philosophy reigns, the Marketplace Fairness Act faces an uphill battle if Alexander’s own delegation is any indication.
“We don’t need the federal government mandating additional taxes on Tennessee families and businesses,” Blackburn said. “The American people have been taxed enough.”
News release from Sen. Lamar Alexander’s office:
WASHINGTON, April 22 – U.S. Senator Lamar Alexander (R-Tenn.) released the following statement today on the U.S. Senate’s decision, by a vote of 74-20, to begin debate on the Marketplace Fairness Act, of which he is a lead cosponsor:
“This legislation boils down to two words: states’ rights,” Alexander said. “We ought to support states’ rights by letting Tennessee and other states decide whether they want to collect taxes that are already owed, and how to treat businesses fairly in the marketplace. Tennessee wants to avoid a state income tax and treat businesses fairly in the marketplace, and it shouldn’t have to play ‘Mother, May I?’ with the federal government to do so.”
The senator spoke on the floor of the U.S. Senate in support of beginning debate on the legislation. Today’s vote to begin debate follows a March 23 vote by the U.S. Senate to pass an amendment to the budget resolution supporting the Marketplace Fairness Act. Both votes included a majority of Republicans.
Alexander said the Senate “sent a clear message in support of the 10th Amendment, saying that states should have the right to collect, or not collect, sales taxes from all who owe it and close a tax loophole that picks winners and losers in the marketplace.”
The Marketplace Fairness Act would grant states the option to require that remote businesses, such as those selling online or through catalogs, collect sales taxes on purchases within states’ borders. Currently, remote businesses do not have to collect sales taxes in the states they sell into, while brick-and-mortar businesses do, creating a price disadvantage.
Alexander sponsored the legislation along with Senators Mike Enzi (R-Wyo.) and Dick Durbin (D-Ill.) and a bipartisan group of 26 other senators, including Senator Bob Corker (R-Tenn.). The legislation also has the support of Tennessee’s Republican Gov. Bill Haslam, as well as other Republican governors and conservative leaders across the country.
— Note: A statement from Corker is below.