Tenn. gov.: Delay streamlined sales tax |
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Thu, 01 Feb 2007 00:40
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NASHVILLE, Tenn. (AFX) - Gov. Phil Bredesen said Wednesday that Tennessee is not ready for a streamlined sales tax, and that he will ask the Legislature to delay starting one by several years.Without a change in the law, the new sales tax system is scheduled to go into effect in July. The biggest change under that plan would be that sales taxes would be collected where a product is delivered, rather than where it originates.Proponents say the streamlined sales tax is needed for states to properly tax items bought online or from out-of-state catalogues.But intrastate commerce would also be affected by the changes, and cities worry that their tax bases would be significantly eroded if they can no longer collect taxes on items made in their jurisdictions but sold elsewhere.'The big change, which is paying the sales tax based on where it's delivered rather than at the source, is one that would be very disruptive in this state,' Bredesen said. 'It causes huge changes in flows of tax revenues between communities.'And under current projections, the state would not gain enough tax revenue to make the change worth it.'If we are going to get $200 million or $300 million of new revenue out of it, I'd ask communities to do it,' Bredesen said. 'But we are not there yet.'A 1992 U.S. Supreme Court ruling prohibits states from forcing a business to collect their sales taxes unless the company has a physical presence in the affected state. The court noted the dizzying array of tax jurisdictions and widely varying definitions of taxable goods, such as fast food versus groceries.Organizers of the states' effort want to unify tax rules and definitions among the states, and want federal lawmakers to pass laws to overcome the Supreme Court ruling and allow states to demand online companies levy the taxes.'The Supreme Court has not acted, Congress had not acted,' Bredesen said. 'I think we should wait and see what happens.'Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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