News release from Tennessee Education Lottery:
NASHVILLE–Marking its ninth straight year of record sales, the Tennessee Education Lottery Corporation today announced totals for the just-ended Fiscal Year 2013, including an all-time high of $339.7 Million in proceeds raised for state education programs, an impressive five percent increase over last year’s then-record $323.4 Million. The Lottery’s strong performance produced approximately $16.2 Million more to be used for education-related funding in Tennessee.
The Lottery also reported $1.36 Billion in total sales for FY 2013, a hefty increase of $56.3 Million over last year’s previous sales records of $1.31 Billion. The totals posted span the fiscal year from July 1, 2012 through June 30, 2013.
Total Lottery funding for education-related programs in Tennessee–including funds used for scholarships, grants, and after-school programs–now exceeds $2.73 Billion since ticket sales began in January 2004.
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.
U.S. Rep. John J. Duncan Jr. is getting a lot of opinions from a lot of people as he weighs the pros and cons of taxing items purchased over the Internet, according to Michael Collins. Gov. Bill Haslam wants states to have the power to collect the tax, arguing it is money that is already owed. Some small businesses in Duncan’s Knoxville-based congressional district take the same position and say it’s a matter of fairness: They already are required by law to collect the tax and send it to the state, but out-of-state online retailers are not.
Calls to Duncan’s congressional offices, on the other hand, are running roughly 12 to 1 against Internet tax legislation pending in Congress. Even his own staff is divided. A couple of his close advisers are encouraging him to support the bill. Another argues it amounts to a tax increase and that he should vote no.
“I’m feeling a lot of pressure from both sides of this bill,” the Knoxville Republican conceded this week.
So where does he stand? “I don’t know,” Duncan said. “I’m still thinking about it.”
He’s not alone. The three other East Tennesseans in the U.S. House — Reps. Phil Roe of Johnson City, Scott DesJarlais of Jasper and Chuck Fleischmann of Ooltewah — all said they are undecided about the bill known as the Marketplace Fairness Act. All three congressmen are Republicans.
“From a fairness standpoint, your small local retailers are at a disadvantage and, right now, frankly, you do owe that tax,” Roe said. “The flip side of that is, hey, this is a foul. Nobody wants to pay more taxes.”
Tennessee’s two U.S. senators — Republicans Lamar Alexander and Bob Corker — both voted for the bill when it cleared the U.S. Senate earlier this month on a 69-27 vote.
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.”
Gov. Bill Haslam says he’ll urge Tennessee’s congressmen to vote for the internet sales tax bill, reports Richard Locker. The bill faces a much tougher vote in the Republican-controlled House of Representatives than it did in passing the Democrat-controlled Senate on Monday. Speaking to reporters after a book discussion at the small, independent Parnassus Books store (in Nashville), the governor said he’s already had conversations with some of the Tennessee House delegation and plans more. “I do think it’s critical for our state. We’re a sales tax driven state. We have folks — this bookstore — that are providing a product and collecting sales tax and other folks who are providing the same product and not collecting sales tax. And it’s not a new tax; it’s a tax that’s is owed right now but that people aren’t paying.”
…The National Conference of State Legislatures, which supports the bill, estimates that Tennessee lost $748 million in state and local sales taxes from internet sales last year….University of Tennessee economics professor William F. Fox, director of the UT Center for Business & Economic Research and a nationally recognized expert on internet sales taxes, said the issue has economic implications beyond taxation. “What we have today is an environment in which the way I buy something determines if I remit the tax. We are subsidizing out of state internet retailers at the expense of the bricks and mortar business in Germantown or on Beale Street. They’re harmed at the expense of a company operating out of Oregon.
“For our congressmen and women not to vote for this, they are saying they would rather advantage retailers out of state than allow our own retailers to compete on a level playing field,” Fox said. He said his research indicates that Walmart employs about five workers per $1 million in sales while Amazon employs one. “It tells us Amazon is really efficient but they don’t need people on a sales floor. I’m not arguing against Amazon. All I’m asking for is a level playing field.”
…Both of Tennessee’s U.S. senators, Lamar Alexander and Bob Corker, voted for the bill in the Senate, where it passed 69-27. But a survey of Tennessee’s House delegation by the Chattanooga Times Free on Monday found that only the two Democrats — U.S. Reps. Steve Cohen of Memphis and Jim Cooper of Nashville — support the bill while most of the seven Republicans haven’t decided and Rep. Marsha Blackburn, R-Brentwood, opposes it.
Haslam pointed to the bookstore he was standing in as an example of the unfair advantage out of state internet retailers have. The small store, co-owned by Nashville author Ann Patchett, employs 19 full and part time workers.
“And if you look around, Davis-Kidd and others used to be here, This is a prime example but it’s not just about books anymore,” the governor said. “I know people that buy their dishwashing detergent online now.”
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.
While Sens. Lamar Alexander and Bob Corker are big supporters of the “Marketplace Fairness Act,” which would allow states to collect their sales tax from online retailers, Tennessee’s U.S. House delegation is torn on the subject, reports The Tennessean. Americans for Tax Reform, headed by anti-tax lobbyist Grover Norquist, contends the proposal is a tax grab that could open the door for other ways for states to attempt to tax businesses and individuals with no physical presence within their borders.
“This leads to only ugly places,” Norquist said in an interview.
Once they have the geographic distribution of a firm’s sales taxes payments, states could argue that they are entitled to a similar percentage of a firm’s overall revenues.
“They do it now with jock taxes,” he said, referring to some states’ attempts to tax out-of-state athletes’ income if they played a certain percentage of their games within their borders.
…(F)irmly opposing the bill is Rep. Marsha Blackburn, R-Brentwood.
“There is nothing fair about the Marketplace Fairness Act currently being considered by the Senate,” she said in a statement.
“We don’t need the federal government mandating additional taxes on Tennessee families and businesses. The American people have been taxed enough.”
At least half of the state’s other eight members in the House remain undecided.
For instance, Patrick Newton, aide to Republican Rep. John Duncan of Knoxville, said: “At this time, Congressman Duncan has very mixed feelings about the bill. He hates to increase taxes on anyone; but on the other hand, he hates to give an advantage to big out-of-state companies that we don’t give to local small businesses.”
Meanwhile, Democratic Reps. Jim Cooper of Nashville and Steve Cohen of Memphis said they were happy to co-sponsor a House version.
“This is not a new tax but the collection of an existing one, and everybody should be for that. Online retailers should follow the same rules that Middle Tennessee’s small businesses do,” Cooper said.
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.
NASHVILLE, Tenn. (AP) — The state House has unanimously approved Gov. Bill Haslam’s proposal to cut the state’s sales tax on groceries.
If approved by the Senate, the state’s tax on groceries would drop by a quarter percentage point to 5 percent. Lawmakers last year enacted a cut of the same amount.
The state’s sales tax on non-food items is 7 percent.
The tax reduction is projected to cost the state about $23 million in state revenue — or an average annual tax savings of about $3.56 for each Tennessean.
The companion bill is awaiting a vote in the Senate Finance Committee but is not expected to find much opposition.
Sales tax on certain goods sold in downtown Nashville would effectively increase by a small fraction under state legislation Mayor Karl Dean’s administration supports as a way to generate new funds to recruit conventions to the Music City Center, according to the Tennessean. The proposal, which originated with the Nashville Convention and Visitors Bureau and a handful of Lower Broadway merchants looking for new ways to attract large conventions, would institute a new 0.025 percent fee on goods and services within Nashville’s downtown business district.
Tourism officials plan to use the funds to underwrite the rent of Music City Center as an incentive to lure conventions here. Sales tax in Davidson County is currently 9.25 cents on every dollar.
The legislation calls the measure a “fee,” one that would produce an estimated $1 million to $1.5 million annually. It would go into effect in 2014.
“The CVB and downtown business owners brought forward this idea and we support it as something that will further bolster our tourism industry,” Metro Finance Director Rich Riebeling said in a prepared statement.
The bill, introduced by state Rep. Mike Turner, D-Old Hickory, and co-sponsored by the majority of Davidson County’s state delegation, heads to the State Government Subcommittee this week.