Tag Archives: sales tax

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.

Memphis voters reject sales tax increase

The Memphis sales-tax referendum failed Thursday by an overwhelming margin of 60 percent to 40 percent, or 17,636 votes to 11,659, in the evening’s final unofficial tally as reported by the Commercial Appeal.

Only 7 percent of the city’s 417,174 registered voters participated.

The result represents a victory for skeptics of the plan to raise the sales tax to expand preschool training and help reduce the property tax.

“Apparently, if the numbers hold, The margin indicates that the will of the people is that they didn’t want to pay more sales tax for a partial Pre-K program, and I’m delighted by that,” said one of the main opponents of the tax, former school board member Rev. Kenneth Whalum Jr.

Whalum and others spoke out against the concept, but didn’t organize campaign committees.

By contrast, proponents built a committee that raised and spent hundreds of thousands of dollars. “The promises that they were making did not line up with the content of the referendum itself. … It feels good to be David defeating Goliath,” Whalum said

Memphis City Council member Shea Flinn, who helped initiate the sales tax referendum, had few words Thursday night.

“We lost. Who won?” he said by phone, then paused for several seconds. “That’s all I can say.”

WSJ: TN ‘illustrative of political crosscurrents’ on Internet sales tax bill

Legislation that would allow states to collect online sales taxes has emerged as a point of tension in high-profile Senate primary races around the nation, creating new uncertainty on an issue that business has long looked to Congress to resolve, according to the Wall Street Journal.

Antitax candidates in Republican races in Wyoming, South Carolina and Tennessee have sharply criticized the legislation and the incumbent senators who voted for it last spring. Now, some Republicans in the House are worried about the political risks of supporting it.

..When the Senate passed the bill by a wide margin in May, it was seen as a big breakthrough for legislation that had been bottled up in committee for years. Supporters thought it could be one of the few major bills to pass a divided Congress this year. It is now in the hands of the House Judiciary Committee.

Since the Senate vote, opponents led by eBay and other online merchants have intensified their efforts to defeat or modify the bill. Antitax activists, including former GOP presidential candidate Ron Paul and the tea-party movement, have stepped up opposition.

…In Tennessee, GOP Sen. Lamar Alexander is facing criticism from his tea-party-allied primary opponent, state Rep. Joe Carr. “I think it’s a reflection that he [Mr. Alexander] is unwilling to challenge establishment ideas,” Mr. Carr said in an interview.

Mr. Alexander sees the issue as one of fairness, said spokesman Jim Jeffries. “This bill is about two words Tennesseans strongly support—states’ rights: whether states are free to collect already-existing sales and use taxes from some of the people who owe them or from all who owe them,” Mr. Jeffries said.

Rep. John Duncan (R., Tenn.) said in his September newsletter that after a public debate in Tennessee, he now has “very mixed feelings” about which way to vote on the measure.

Tennessee is illustrative of the political cross-currents around the issue. Like many Sunbelt states, it is heavily dependent on its sales tax. Several state GOP leaders, including Gov. Bill Haslam, are prominent supporters of the federal legislation as a way to avoid instituting a state income tax as the sales-tax base erodes.

On the other hand, a recently released poll by two conservative advocacy groups, National Taxpayers Union and R Street, shows that voters nationally oppose the legislation by 57%, and opposition runs highest in the South, at 61%. The poll concluded that support for the measure “is a dangerous vulnerability” for GOP incumbents, though backers of the bill say their own polling shows growing support among voters.

“People like their tax-free Internet,” said Glenn Jacobs, a WWE professional-wrestling star known in the ring as “Kane,” who has also become a high-profile libertarian activist in his home state of Tennessee.

TN Still Leads Nation in Sales Tax Rate

News release from Tax Foundation:
Washington, D.C, August 28, 2013—Consumers in Tennessee, Arkansas, Louisiana, Washington, and Oklahoma are shouldering heavier combined state and average local sales tax rates than consumers in other states, according to a new study by the nonpartisan Tax Foundation. Additionally, the report indicates that Alaska, Hawaii, Maine, Wisconsin, and Wyoming have the lowest combined rates, and details the changes Virginia, Arkansas, Arizona, Kansas, and the District of Columbia have made to their sales taxes in 2013.

“Sales taxes are one of the most easily understood taxes because every time a consumer makes a purchase, they can see the rate on the receipt” says Tax Foundation economist Scott Drenkard. “Our comprehensive analysis addresses the fact that 38 states allow local governments to levy sales taxes within their jurisdiction. These local rates, when combined with the statewide rates, can result in substantially larger tax bites.”

Five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of these, Alaska and Montana allow localities to charge local sales taxes.

The five states with the highest average combined rates are Tennessee (9.44 percent), Arkansas (9.18 percent), Louisiana (8.89 percent), Washington (8.87 percent), and Oklahoma (8.72 percent). The five states with the lowest average combined rates are Alaska (1.69 percent), Hawaii (4.35 percent), Maine (5 percent), and Wisconsin (5.43 percent), Wyoming (5.50 percent).

The new report also details the significant changes that have taken place in states’ treatments of sales taxes in 2013. As a result of new transportation legislation, Virginia’s statewide sales tax rate increased on July 1, 2013 from 5 percent to 5.3 percent; localities in Northern Virginia and Hampton Roads charge a 6 percent combined rate. Also effective July 1, 2013, Arkansas raised its state sales tax rate from 6 percent to 6.5 percent.

Not all states are increasing their rates, however. Arizona cut its rate from 6.5 percent to 5.5 percent as a temporary sales tax increase expired, and Kansas moderately cut its statewide sales tax rate from 6.3 percent to 6.15 percent. The District of Columbia is scheduled to lower its sales tax from 6 percent to 5.75 percent on October 1, 2013.

“Of course, sales taxes are just one part of an overall tax structure and should be considered in context,” adds Drenkard. “For example, Washington State has high sales taxes but no income tax; Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts.”

Tax Foundation Fiscal Fact No. 392, “State and Local Sales Tax Rates Midyear 2013,” by Scott Drenkard is available online….

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state, and local levels since 1937.

Ads Attack Amazon.com Sales Tax Avoidance

A national retailers group is running ads in Nashville, Knoxville and Memphis newspapers urging state officials, including Gov. Bill Haslam, to require Amazon.com collect sales taxes on items it sells in the state.
More from Andy Sher’s story in the Chattanooga TFP:
The ad campaign by Arlington, Va.-based Alliance for Main Street Fairness comes as Amazon, the world’s largest online-retailer, moves to build two distribution centers in Southeast Tennessee under an economic development deal struck with the state and Hamilton County
…Amazon officials did not respond to multiple requests for comment. The Alliance for Main Street Fairness, which says it has small and national retailers among its members, also ran similar ads in newspapers outside Chattanooga earlier this year.
The group is waging a multistate battle to compel Amazon to collect sales taxes.
As the issue continues to boil, lobbyists for national retailers such as Wal-Mart are talking to the Haslam administration and lawmakers.
“We hope that Tennessee’s executive branch, legislators and regulators will work to stop what amounts to a backroom deal that has unfairly chosen winners and losers in the marketplace and drains much needed resources from Tennessee residents,” said Daniel Morales, Wal-Mart’s director communications and community relations.