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Press Releases Uncategorized

State Sales Tax Collections Come In Short Of Expectations In September

Press Release From Tennessee Department of Finance & Administration, Oct. 11, 2013;

NASHVILLE – Overall September revenues were under the budgeted estimates in Tennessee, although sales taxes continue to show modest growth.

Finance and Administration Commissioner Larry Martin reported that overall September revenues were $1.1 billion, which is 5.22 percent below the budgeted estimate.

“The sales tax is the ‘bread and butter’ of revenue collections in Tennessee, and it’s our leading economic indicator,” Martin said. “September sales tax collections continued to reflect modest growth consistent with a sluggish economy.

“With uncertainty surrounding resolution of the federal budget, and national economic indicators that continue to reflect mixed results, we are required to continue close scrutiny of revenues and expenditures for the balance of this fiscal year. We will maintain a balanced budget and conservatively manage the state’s spending.”

On an accrual basis, September is the second month in the 2013-2014 fiscal year.

September collections were $59.0 million less than the budgeted estimate. The general fund was under collected by $62.1 million and the four other funds were over collected by $3.1 million.

Sales tax collections were $1.9 million less than the estimate for September. The September growth rate was positive 3.50 percent.

Franchise and excise taxes combined were $65.6 million below the September budgeted estimate of $342.7 million. The September growth rate was negative 10.37 percent.

Gasoline and motor fuel collections for September increased by 4.82 percent and were $2.2 million above the budgeted estimate of $69.6 million.

Tobacco tax collections for the month were under collected by $1.7 million, and the growth rate was negative 4.97 percent.

Privilege tax collections were $0.3 million less than the budgeted estimate of $20.0 million.

Inheritance and estate tax collections were $5.3 million above the budgeted estimate.

All other taxes were over collected by a net of $3.0 million.

Year-to date collections for two months were $83.3 million less than the budgeted estimate. The general fund was under collected by $82.9 million and the four other funds were under collected by $0.4 million.

The budgeted revenue estimates for 2013-2014 are based on the State Funding Board’s consensus recommendation of December 19th, 2012 and adopted by the first session of the 108th General Assembly in April 2013. They are available on the state’s website at http://www.tn.gov/finance/bud/Revenues.shtml.

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Press Releases

Grocery Sales Tax Cut Signed by Haslam

Press release from the Office of Tennessee Gov. Bill Haslam; May 21, 2013:

VONORE – Tennessee Gov. Bill Haslam today traveled to Monroe County to sign legislation to reduce the state portion of the sales tax on groceries from 5.25 percent to 5 percent.

Haslam held a ceremonial bill signing at Sloan’s Grocery in Vonore, Tenn.

In 2012, the General Assembly passed and the governor signed the first step in reducing the state portion of the sales tax on groceries, lowering the rate from 5.5 percent to 5.25 percent.

“We’re lowering taxes and balancing the state budget by managing conservatively, making strategic investments in our priorities and finding new ways to make government more efficient and effective,” Haslam said. “The sales tax on food impacts all Tennesseans, and I applaud the General Assembly for passing this important piece of legislation this year.”

The bill, SB 199/HB 193, was introduced by the governor and was one of two tax cuts passed by the legislature and signed by Haslam this year as the state continues its work toward providing the best customer service at the lowest possible cost to taxpayers.

Senate Majority Leader Mark Norris (R-Collierville), House Majority Leader Gerald McCormick (R-Chattanooga) and state Rep. Ryan Haynes (R-Knoxville) sponsored the bill.

Haslam included $23 million in the FY 2013-2014 state budget to fund the legislation. The legislation goes into effect July 1, 2013.

The reduced tax rate does not apply to prepared foods such as a meal at a restaurant, candy, alcoholic beverages or tobacco.

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Press Releases

Ramsey Questioned on Use Tax Payments by TN Liberty Group

Press release from the TN Campaign for Liberty; May 13, 2013:

Nashville, TN – The Tennessee Campaign for Liberty challenges Lt. Governor Ron Ramsey to show he has fully paid the Tennessee Use Tax he owes to the Tennessee government. In a comment given to the Commercial Appeal published on May 9th, 2013 Lt. Governor Ron Ramsey stated “I am very much for the Marketplace Fairness Act…It’s not a new tax. It’s a tax you’re supposed to be paying now and you are breaking the law if you don’t.” referring to the Tennessee use tax as if it were the same thing as the statewide sales tax.

“The vast majority of Tennesseans do not pay the TN Use Tax, most don’t know that it exists or even how to pay it” said Matt Collins, a Coordinator with the TN Campaign for Liberty. “We’re willing to bet that like most Tennesseans, Lt. Governor Ron Ramsey hasn’t paid all of the use tax that he owes to the Tennessee government for purchases that his household made online. Can he prove otherwise? If not, then it’s the height of hypocrisy to label people as criminals for not paying the very same tax that he himself avoids. He should show the People of Tennessee his Use Tax receipts.”

Lt. Governor Ramsey’s comments were in regards to attempting to sway the Tennessee Congressional delegation to support his push for the national Internet sales tax mandate. It will likely come up for a vote in the US House of Representatives later this year. The bill is known as the “Marketplace Fairness Act” and is being opposed by the Campaign for Liberty, eBay, the Cato Institute, the Heritage Foundation, the National Taxpayers Union, Americans for Tax Reform, Americans for Prosperity, Freedomworks, the Heartland Institute, Congresswoman Marsha Blackburn, and many other conservative figures.

According to the Tennessee Use Tax website: “If you buy or ship merchandise to your Tennessee address and sales tax is not added to the price, then you are responsible for paying the use tax directly to the TN Department of Revenue….The use tax rate is a combination of the state tax rate of 7% … plus the rate levied by your local government, generally 2.25%. The tax is applied to the purchase price of the merchandise plus any shipping and handling charges that the merchant adds to your bill.”

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NewsTracker Tax and Budget

Senate Passes Tax Cut on Groceries, Henry Talks Fancy Cheese

A bill aimed at easing the pain at Tennessee’s grocery checkout lanes is headed to the governor’s desk for approval.

Senate Bill 199, sponsored by Majority Leader Mark Norris of Collierville, would reduce retail sales tax on food from 5.25 percent to 5 percent. The measure passed the state Senate almost unanimously Monday.

The sole “no” vote came from elder Nashville Democrat Douglas Henry, who applauded the financial relief the bill would give to low-income Tennesseans but argued the importance of revenue from the tax and lamented that the break would also apply to wealthier residents, himself included, when buying luxury items.

“This is the best tax we got, it pays for everything,” Henry told the chamber. “When you give it back to poor people, that’s good. But you also give back to rich people. I buy imported Swiss cheese because I like to eat it. You’re lowering taxes on my cheese as well as the poor man’s Velveeta”

The legislation has already cleared the House and would go into effect on July 1, pending Gov. Bill Haslam’s signature.

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Press Releases

TN Conservative, Tea Party Groups Condemn National Internet Sales Tax

Press release from Tennessee Campaign for Liberty; March 21, 2013:

Nashville, Tenn. – Conservative and Tea Party groups across the state of Tennessee have signed a resolution condemning Senator Lamar Alexander, Governor Bill Haslam, and Senator Bob Corker’s push for a national Internet sales tax scheme, known as the “Marketplace Fairness Act” (MFA). Sources close to the Campaign for Liberty indicate that language contained in the Act will be voted on in the US Senate in the next few days. Read the entire resolution and list of signers at www.TNCampaignForLiberty.org

The MFA would seek to overturn a 1992 Supreme Court decision (Quill vs North Dakota) which ruled that businesses that do not have a physical presence in a state cannot be forced to collect sales tax for that specific state government. The Quill decision protects online businesses from having to collect tax for all 50 states, and also prevents taxation without representation by prohibiting state governments from enforcing their laws on business outside of its borders.

The MFA would force each online retailer to create different pricing structures for every individual customer, a massive burden and significant increase in cost to doing business. It’s assumed that these costs would be passed on to the customer, causing the price of all online purchases to increase on top of the new taxes imposed as a result of this Act. These types of regulation would likely be stifling to online commerce and detrimental to the economy overall.

Matt Collins, a coordinator with the Tennessee Campaign for Liberty discusses the issue: “This is reflective of a bigger question, that of how much authority will the government hold during the Internet Age? Will states get to exercise power outside of their borders, or will there be an unlimited reach available to every government? Taxation without representation is always appealing to the politicians because they cannot be held accountable by the people they are taxing. We are at a fork in the road and can move forward with either more freedom, or move backwards with more government; Internet taxation is one of the first steps in deciding which direction we’ll take.”

Free market groups like Cato Institute, Competitive Enterprise Institute, Americans for Tax Reform, Nat’l Taxpayers Union, Heartland Institute, Heritage Foundation, Reason, and even eBay and the Direct Marketing Association are opposing this measure. Liberty activist and professional WWE Wrestler from Strawberry Plains, TN, Glenn Jacobs, authored an opinion piece earlier this week in which he called the Act “fraudulent” and “anything but fair”: http://lewrockwell.com/jacobs/jacobs12.1.html

Political experts suggest this issue may be a point of contention during any potential primary race against Senator Alexander in the 2014 election season.

Matt Collins also noted that “Republican elected officials who are joining Dick Durbin, Dianne Feinstein, and Al Franken to support this measure should know that recent polling shows almost half of Americans do not want an expansion of sales taxes on the Internet and 63% of conservatives are opposed to it. When the question is framed about states pushing their laws outside of their borders 61% of Americans oppose it and 77% of conservatives do too. In fact 84% of Republicans oppose any sort of expansion of governmental power over the Internet, especially taxation or regulation. It is likely that any Republican who supports this massive expanse of government power will see a primary challenge because of it.”

The mission of the Campaign for Liberty is to promote and defend the great American principles of individual liberty, limited government, sound money, free markets, and a Constitutional foreign policy, by means of education, issue advocacy, and grassroots mobilization. The Campaign for Liberty was formed in 2008 after the conclusion of Congressman Ron Paul’s Presidential bid.

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Featured Tax and Budget

Harwell: Widespread Hunger in TN House for Another Slice Off State’s Fat Grocery Tax

Lowering the sales tax on food, overhauling workers’ compensation, the possible expansion of Medicaid in Tennessee and school vouchers will likely be top topics for debate, state House Speaker Beth Harwell said Thursday when discussing the GOP’s 2013 legislative agenda.

“I’ll think we’ll make another move to lower the sales tax on food in the state,” the Nashville Republican said, pointing to Gov. Bill Haslam’s plan to lower the tax bite to 5 percent — equal to about $9.60 less in taxes for a household in a year, based on average spending of $3,838 a year for groceries. State lawmakers cut the rate from 5.5 percent to 5.25 percent this year.

“Workers’ comp is something the governor is probably going to have on his agenda,” Harwell said. “And we’ll see a lot of other legislation coming from individual members, I’m sure.”

Regardless of the issues, it’s all but certain that the GOP will have its way, with both the Senate and the House enjoying supermajorites — the ability to pass legislation without a single Democratic vote — and Republican Bill Haslam in the governor’s office.

“Our Republican caucus is as united as I’ve ever seen it,” Harwell said.

That’s not to say that Tennesseans won’t see some fireworks from Democrats. Issues such as school vouchers and charter schools will largely affect the state’s large urban areas that have strong Democratic control, and certainly Democrats will make a way to have their voice heard.

Harwell did not take a position on either vouchers or an expansion of Medicaid.

“The whole issue of vouchers is one that the legislature will spend a considerable amount of time debating and discussing,” Harwell said.

On Medicaid: “My first-blush reaction is that I’m not in favor of expansion. However, when you look at the numbers there is some justification financially as to why we might want to expand it.”

Trent Seibert can be reached at trent@TNReport.com on Twitter at @trentseibert and at 615-669-9501.

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Business and Economy Featured NewsTracker Tax and Budget

Haslam: Fed Gov’t ‘Enabling’ Evasion of Taxes Due to State

Gov. Bill Haslam insists a federal plan requiring online merchants to collect sales taxes is the way to go, despite it meaning online shoppers would be forced to cough up more money for government to spend.

Fresh from testifying before Congress in favor of such a plan, Haslam told reporters Wednesday the current system is “enabling people to get around the law.”

“The tax is already due. There’s no question,” he told reporters in Dickson. “I think the basic thing is an issue of fairness. If you’re a hardware store out here on Main Street or a business of any type, you’re competing with people on the Internet who don’t have to collect the sales tax. I just don’t think that’s right.”

Haslam wrestled with this concept last year during negotiations with Amazon, an online retailer that ultimately agreed to open four warehouses in Tennessee in exchange for not collecting sales taxes from Tennessee customers until 2014 unless the federal government requires it earlier.

The issue sparked division among state lawmakers. Some argued the online retailer should have been forced to begin collecting sales taxes immediately, just like brick-and-mortar retailers. Others said the requirement would have constituted a tax increase on average Tennesseans.

However, lawmakers agreed to the deal and rewrote provisions into state law to codify the plan.

Haslam’s interpretation of what does or does not constitute a tax increase isn’t universally accepted among Tennessee conservatives. Examiner.com blogger David Oatney took Haslam to task on the issue this week, saying that, regardless of how the governor prefers spinning it, as far as consumers are concerned, “Going from not being taxed to being taxed is a tax increase-period!”

According to Oatney:

The Governor can phrase this however he wants, but this legislation both increases taxes and cripples competition. What the Governor is calling “leveling the playing field” is really “forcing out-of-State businesses who do mail-order business to collect other States’ sales taxes for them.” It is designed to favor so-called brick-and-mortar retailers in their competitive business battle against internet businesses that have advanced into the 21st Century. If the situation involved other means of business and trade, some of these same people would be crying that this legislation was government “protectionism.” The double-standard in this situation reeks and is politically foul-smelling.

Haslam, who was representing the National Governors Association in Washington, told the U.S. House Judiciary Committee that Tennessee was losing out on an estimated $400 million annually in sales tax revenue.

The future of any federal legislation is uncertain. There are three proposals circulating the nation’s capitol, and neither party wants to let the other claim victory on getting a measure passed.

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Press Releases

Nat’l Online Business Trade Assn. Opposes New Internet Taxes

Press Release from NetChoice, July 23, 2012:

Washington, D.C. – NetChoice Executive Director Steve DelBianco today testified before the House Judiciary Committee about the dangers of enacting the Main Street Fairness Act (H.R. 3179).

While the proposal is intended to put traditional brick-and-mortar retailers on a level playing field with online retailers, it widely misses that mark while adding unfair new tax burdens on small online and catalog businesses.

NetChoice also announced its membership in a coalition dedicated to opposing new taxes on Internet sales. The True Simplification of Taxation (TruST) Coalition represents American businesses in the fight to keep interstate commerce and competition free from unfair tax burdens imposed by states where our businesses have no operations or representation.

Businesses that sell goods and services online are already required to collect taxes in areas where they have a physical location. Research shows that uncollected taxes related to online sales equal less than one half of one percent of state tax revenues.

“Even though the vast majority of online sales taxes are already collected, state tax collectors and big box retailers are teaming up to levy taxes on businesses that have no local presence,” said Steve DelBianco, executive director or NetChoice. “TruST will counter this new tax campaign that would saddle online retailers with a new and burdensome tax system that weigh most heavily on the smallest of sellers.”

States have tried and failed to simplify their tax systems in a way that would not add cost or complexity for online retailers. Having failed at that program, tax collectors are now asking Congress for the authority to tax first and answer questions later.

TruST will be an ongoing resource for those mobilizing against new online taxes that will slow and harm the growth of online retail.

NetChoice is an advocacy organization that fights threats to online commerce and promotes policies that protect Internet innovation and communication on a state, federal and international basis. The Washington, DC-based group protects Internet commerce-driven competition and battles rules that hinder consumer choice and hurt small businesses. For more information, see www.netchoice.org.

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Press Releases

Haslam to Congress: Internet Sales Tax Collections A Fairness Issue

Statement of Tennessee Gov. Bill Haslam at the U.S. House of Representatives Committee on the Judiciary Hearing; July 24, 2012:

-As prepared-

Chairman Smith, Ranking Member Conyers and members of the committee, I am grateful to be here to testify on behalf of the National Governors Association. I believe I am uniquely positioned to be before you to talk on this issue today.

I come from a family that founded and operates a national retail business based in Tennessee. I have served as chief executive officer of Saks Direct, Saks Fifth Avenue’s online and catalog retailer. I was Mayor of Knoxville, a city that’s budget depends on property taxes from both businesses and residents. And now I’m Governor of a state that’s budget relies heavily on sales tax collections.

Let me be clear – I am a Republican Governor that does not believe in increasing taxes. Tennessee is a low tax state to begin with, and we’ve been able to cut taxes over the past two years. This discussion isn’t about raising taxes or adding new taxes. This is about states having the flexibility and authority to collect taxes that are already owed by their own in-state residents.

This discussion is also about leveling the playing field for local brick and mortar businesses in communities across Tennessee and across the country.

For example, I’ve heard Senator Alexander talk about the Nashville Boot Company where the owner tells about a customer who came into the store, tried on a pair of boots, asked the employees questions about the boots and then went home and ordered them online to keep from paying State sales tax, which we need to remember that state law already says the customer owes.

When you buy something at the Nashville Boot Company, or any other local store, the tax you owe is calculated with your purchase, they add it to your bill, and then send the taxes owed to the state for you.

This is an issue of fairness. Comparable businesses that sell the same things are not being treated the same. Most people I talk to understand that and agree that isn’t fair.

So why is this happening today?

Because 20 years ago the Supreme Court said that States couldn’t require out-of-state catalogs or online businesses to collect sales tax because it was too complicated for them to calculate the sales tax in each state, much less in local communities. But in the past two decades, technology has advanced more than almost anyone could have believed, and it is not only possible, but it is easy, for these businesses to collect the taxes owed just like local businesses with cash registers do.

Current software covers over 12,000 state and local tax rates, and there are at least eight companies already competing to provide software that is affordable to even the smallest businesses.

But this isn’t only an issue that impacts business. As state budgets are stretched and state leaders are working to provide services to taxpayers at the lowest cost in the most efficient and effective way, we are talking about real dollars.

The current estimate of sales tax that goes uncollected each year in the United States is more than 20 billion dollars. In Tennessee, we believe that number to be 400 million dollars. That money could fund critical state programs that vulnerable citizens rely on; it could help cover federal mandates that states face; or it could go back to the taxpayers in the form of further tax relief.

We would certainly have healthy discussions in Tennessee about how to allocate those dollars, but that is for another time. My point today is that states should have the authority to collect that money, which is already owed, and to be able to make budgeting decisions that include those dollars.

We probably all know this intuitively – Internet shopping is a trend that is on the rise. When my daughter-in-law buys her laundry detergent online, that tells you something.

According to the U.S. Census Bureau, e-commerce represented 16.6 percent of retail sales in 2011, and online sales grew 16.1 percent compared to overall retail sales which grew 4.7 percent.

More and more people are doing their shopping online and are expected to spend more money.

According to Forrester Research, 25 million more Americans are expected to shop online in four years, and each shopper will spend an average of $530 more (up from $1,207 in 2012 to $1,738 in 2016) [Forrester Research: U.S. Online Retail Forecast, 2011 to 2016].

The argument that this is a small part of the economy doesn’t hold up.

This is the right time for Congress to act.

As a Governor, I realize in the coming years that Washington is going to be sending states and local governments less and less money as you tackle the nation’s debt. And as a Republican, I am proud of you for doing that. But if that is the case, then you should also allow each state to have the flexibility to make decisions about this issue and to collect taxes that are already owed.

This is a conversation about fairness. Fairness to states in allowing them to manage their own budgets, and fairness to local businesses that are part of the fabric of this country, are vital to our economy and our entrepreneurial identity.

Thank you.

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Business and Economy NewsTracker Tax and Budget

Amazon Sales Tax Collection Measure Advances

Lawmakers spent much of last year riding a political roller coaster to define Amazon.com’s role in collecting sales taxes from online shoppers. This week they made their first move to approve a deal reached between the state and the online retail titan.

Just a day before Gov. Bill Haslam toured the new Amazon warehouse in Chattanooga Thursday, a House Finance subcommittee easily approved legislation to seal a deal with Amazon to collect sales taxes from its online shoppers beginning in 2014. It will amount to about $23 million a year, according to legislative analysis.

“These sales taxes are already due,” House Majority Leader Gerald McCormick, R-Chattanooga, told the committee as he pitched the bill. “This simply is a collection issue, and they have agreed to collect the sales tax.”

The deal means Tennessee taxpayers who shop online will get to hold on to about $40 million in revenue that could be collected between now and 2014, according to legislative staff.

Haslam and Amazon.com executives announced a deal in October where the Internet retailer would make a $350 million investment by opening distribution centers in Hamilton and Bradley counties. The Internet retailer is opening additional centers in Lebanon and Murfreesboro.

The arrangement, which was called “Project Tango” by officials, grew out of a deal struck between outgoing Gov. Phil Bredesen and Amazon executives just weeks before Haslam took office.

Lawmakers quickly split on the issue. Although they liked the prospect of Amazon creating thousands of jobs in the state, some argue the company ought to be forced to collect money from Tennesseans for the government just like any other business located here.

One of those critics, who says he is satisfied with the current deal, says he doesn’t see the bill hitting any snags making its way through the Legislature, even though Amazon has brokered deals in other states that require the company to collect sales taxes as soon as September.

“There are a number of states that are not collecting a penny, and this is something we were able to work out, plus the benefit that we are going to have four distribution centers in the state of Tennessee. I think that’s a good thing,” said House Finance Committee Chairman Charles Sargent, R-Franklin.

The issue is one of national significance. Amazon has argued there is no uniform law that requires it to collect sales taxes and that the company doesn’t meet a legal threshold called “nexus” for collecting the taxes because it doesn’t have brick-and-mortar sales facilities in many states seeking the tax.

Giving the Internet retailer a pass on collecting sales taxes is unfair to Tennessee business with a physical state presence because they have to charge customers the tax, says critics with the Tennessee Alliance for Main Street Fairness, a fierce opponent to the Amazon deal in Tennessee and across the country.

Only a federal law requiring the retailer collect sales taxes in all states would trigger Amazon to collect sales taxes any earlier than 2014.

House Speaker Beth Harwell, who met with Amazon executives Wednesday, said she too sees no trouble writing the deal into state law, but wants a national solution from Washington.

“Our federal government has got to take action on this issue, and until they do, all of our hands are tied,” she said.

The state legislation is up again for discussion in both the House Finance committee and the Senate tax subcommittee Tuesday.