For immediate release - March 10, 2009

Contact:

• John Stewart, TFT Board Chair, 865-584-3834 (home) or 865-806-8115 (cell)
• Samantha Wallace, TFT Knoxville Office, 865-687-9600 x12 (office) or 865-696-5212 (cell)
  

Fiscal Reprieve Provides Opportunity to Modernize Tax System

Tennesseans for Fair Taxation (TFT) applauds the announcement by Governor Bredesen, that about $770 million from Tennessee’s share of the federal economic stimulus will be made available to Tennessee’s institutions of higher education, thereby limiting the sharp budget cuts of approximately $900 million that previously had been forecast for 2009.

The Governor noted that higher education has “definitely dodged a bullet,” but cautioned that significant belt-tightening will be needed to avoid drastic cuts once the federal stimulus runs its course. The Governor further observed that “ . . . higher education will have the luxury of a great deal more time and the luxury of seeing. . . exactly what’s going to happen and make better plans for the future.”

“Here’s the crucial question now facing Tennessee: How will we use this luxury of extra time? Will we use it to get off the path of fiscal disaster that led us to these huge deficits in the first place or will we squander it by making the same mistakes over and over?” asked John G. Stewart, State chair of TFT.

Stewart pointed out that Tennessee’s existing tax system, designed in another era to deal with totally different challenges, is not capable of generating the revenue Tennessee needs for higher education and other critical state responsibilities.

“One thing we've learned is that, unlike the rest of the nation, the budget shortfalls in Tennessee pile up in both good and bad economic times, thanks to an outdated and dysfunctional tax system,” states Stewart. “When the recession ends and other states begin to run a budget surplus, Tennessee will still be facing a deficit unless our tax system is modernized. Raising the nation’s highest sales tax even higher is a guaranteed ticket to economic oblivion.”

“It is vital that we use the luxury of more time provided by the federal stimulus to get Tennessee out of the deficit ditch permanently, not just waste these two years fooling around with a tax system that no longer works.”

“Making better plans for the future, as advocated by the Governor, means making a better tax system to serve the needs of all Tennesseans,” Stewart said.

TFT is supporting the “Tax Modernization and Economic Stimulus Act of 2009” currently pending the state House (HB 2182) and Senate (SB 2054). This plan would diversify and modernize Tennessee's revenue system, resulting in lower taxes for over 60% of Tennesseans while raising over $1 billion in needed state revenue. Stewart points out that Tennessee would still be a low-tax state, moving up only four places from 49th to 45th in state and local taxes as a percentage of income, but would be on more solid fiscal ground and better able to fund programs from health care to education that are important for a strong economy.

For more information, visit http://www.fairtaxation.org/reform/overviewofplan.php

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