May 7, 2009 - For immediate release…

Contact:

• Bill Howell, Nashville Staff, 615-289-1397 (cell)
• Ron Naylor, Board Member, 423-451-0074 (home) or 423-280-1801 (cell)
• John Stewart, Board Chair, 865-584-3834 (home)
• Brian Miller, Exec. Director, 865-687-9600 x14 (office) or 865-712-8006 (cell)

Growing Shortfall Points to Need for Tax Modernization

“It’s time we face the facts. Tennessee is stuck in a ditch, a ditch of failed tax policies that do not produce enough revenue to meet the needs of Tennesseans,” says Tennesseans for Fair Taxation (TFT) Board member Ron Naylor of Chattanooga. Today, the Funding Board released new projections with the state now expected to fall as much as $1.16 billion into the red. Naylor adds, “Is it any wonder we’re in this mess? The major portion of our state budget comes from the sales tax levied on products that people buy. We’re in a recession, and in a recession people stop buying. No buying means no sales tax. A shortfall in taxes means cuts in important public structures from higher education to community health.”

“We’re at the end of our rope,” adds Naylor, “Our future lies in educating our children so they can take over from us. But, we’re starving their education, so we’ll get leaders in the future who are untrained. But, even worse, we’ll get followers who don’t know that they’re untrained.” In response to the shortfall, proposals are on the table to gut higher education and freeze all new investments in K-12.

John Stewart of Knoxville, TFT’s statewide Board Chair, notes, “We’re down to the wire here facing off against a massive budget shortfall. What are we going to do? More of the same failed policies? Are we going to continue to play sales tax suicide? We’ve done that for forty years, with one sales tax hike after the other, and look at us now.” As a result of its heavy dependence on one revenue source, Tennessee now has the highest average sales tax in the nation. This high sales tax drives shoppers over state lines and onto the internet, costing Tennessee both jobs and needed tax revenue.

“To get out of this deepening recession, restore funds to education and other vital services, and gear up for an emergence into a decent economy, we need tax modernization,” adds Naylor. “By lowering the sales tax, tax modernization will help Tennessee businesses compete, keeping jobs here in the state when we need them most. By eliminating the food tax and reducing the sales tax, modernization will reduce taxes for those families hardest hit by the current economic downturn, families most likely to spend those tax savings locally to jump-start our economy. Finally, tax modernization will raise one billion dollars through creation of a progressive and fair state income tax, allowing our state to invest in education and other vital public structures. This creates jobs today, and also lays the foundation for a strong economy in the future.”

TFT is supporting the Tax Modernization and Economic Stimulus Act (SB2054/HB2182) that will fully repeal the food tax, lower the combined sales tax on other items by 3%, eliminate the Hall Tax, and enact a graduated income tax with generous front-end exemptions. TFT is also supporting an array of bills to close corporate tax loopholes and unjustified exemptions in the sales tax.

Naylor and others at TFT are calling on legislators to “wade into the fray, enact tax modernization, and watch Tennessee rise. It’ll take guts, but our future depends on it!”

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