For immediate release -
August 13, 2009
Contact:
• John Stewart, TFT Board Chair, 865-584-3834 (home) or 865-806-8115 (cell)
• Bill Howell, TFT Nashville, 615-751-5011 (off) or 615-289-1397 (cell)
• Samantha Maples, TFT Knoxville, 865-687-9600 (off) or 865-696-5212 (cell)
TENNESSEE FORGOES MILLIONS OF DOLLARS OF TAX REVENUE—
COMPLETE OVERHAUL NEEDED TO GET TENNESSEE BACK ON THE ROAD
Earlier this week Finance and Administration Commissioner Dave Goetz reported that for the first time in history, Tennessee has recorded a full year of “negative growth” of state tax revenue. Goetz said July revenues were $61.8 million less than forecast. Sales tax revenues have experienced “negative growth” for 17 out of the past 19 months when compared to the prior year.
“This history-making development is directly linked in people’s minds to the most serious economic downturn since the Great Depression of the 1930s. But that is only part of the story,” said John G. Stewart, State Chair of Tennesseans for Fair Taxation.
Stewart pointed out that Tennessee walks away from many potential sources of revenue that could significantly close the growing revenue gap that threatens vital state services counted on by thousands of Tennesseans.
“We’re trying to run this state with one hand tied behind our back and Tennessee citizens are paying a high price for not taking full advantage of revenue sources that are out there,” Stewart added.
Stewart noted that more and more untaxed purchases are made on the Internet, through mail order catalogues, or by traveling to neighboring states with lower tax rates. Multistate businesses pay much lower taxes in Tennessee by sheltering their income in Delaware and Nevada (where there are no corporate taxes).
In addition, there is an ongoing shift in our economy from taxable goods to untaxed services. The cumulative impact of these uncollected revenues is certain to grow in future years, ensuring a continuing revenue crisis in Tennessee even when the economy bounces back.
“The Federal stimulus money helped Tennessee avoid a total breakdown in state services this year but what happens when the stimulus money is all used up next year?” Stewart said.
“The truth is simply this: Tennessee’s tax structure, the ‘engine of state,’ is sputtering badly,” Stewart said.“It’s time to drag this sputtering engine into the shop for a total overhaul. We need to tear down the engine and rebuild it.”
Stewart outlined the key elements of this engine overhaul:
• Start by eliminating the sales tax on food and reducing the rate on other items to bring Tennessee consumers back to shopping in Tennessee.
• Use every means at our disposal to collect sales taxes on Internet and other out-of-state purchases.
• Continue by closing the loopholes that allow multistate businesses to avoid Tennessee excise tax, costing Tennessee hundreds of millions of dollars in lost revenue.
• Make more services subject to the sales tax.
• Convert the Hall income tax to a broad-based, graduated-rate tax with generous exemptions.
“Such actions will generate the revenue Tennessee needs to maintain essential state services when the Federal stimulus is over and done with and in future years. Rebuilding the ‘engine of state’ along these lines is the only way to get Tennessee out of the ditch,” Stewart said.
“After a complete overhaul, the engine of state will start to rev again, propelling Tennessee back to prosperity.”
“Bills have been introduced in the Tennessee General Assembly that will accomplish all of these urgent repairs to our tax structure,” Stewart said.
“We also call on Governor Bredesen to make revenue enhancement his top priority in the 2010 legislative session, instead of relying on even more budget cuts to an already crippled state government.” Stewart concluded.
For more detail on all these proposals, see the Tennesseans for Fair Taxation web site at http://www.fairtaxation.org
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