BILL STEBER / STAFF Rep. Matt Kisber, left, chairman of the House Finance Committee, talks with Sen. Jim Kyle, vice chairman of the Senate Finance Committee, and John Morgan, state comptroller. TWO INCOME TAX PLANS MAY come to a vote TODAY.
Sales tax plan rejected; proponent may take idea to Senate floor
By BONNA de la CRUZ Staff Writer
A stopgap tax package, billed as an alternative to a state income tax, was rejected yesterday by the Senate Finance Committee, as advocates of two separate income tax plans said they might ask for votes today.
State lawmakers are facing a Sunday deadline to approve a budget and avert an almost total shutdown of state government. They need $877 million to fund the present-day level of services.
The Senate Finance Committee voted down a business and sales tax proposal called Continuing Adequate Taxes and Services, dubbed the plan, but its sponsor, Sen. Doug Jackson, D-Dickson, said he would bring it back.
''A cat has nine lives, and we've only used one,'' Jackson said shortly after the 5-6 vote. The plan would generate $766 million by raising the sales tax to 8.75% statewide, imposing $200 million of new business taxes and increasing cigarette and alcohol taxes.
Jackson asked the Senate committee to approve the plan in concept and said he would add details in an amendment on the Senate floor, from where the plan then would be sent back to the committee.
Sen. Jim Kyle, D-Memphis, said that legislators ordinarily did not vote on ideas and that Jackson's proposed process was ''convoluted.'' Sen. Bob Rochelle, D-Lebanon, said he would not participate in what he termed a ''charade.''
Afterward, Jackson said two key Senate supporters on the committee — Joe Haynes, D-Goodlettsville, and Ward Crutchfield, D-Chattanooga — told him that would be the only way to get the bill out of the committee to the Senate for a vote. Another member who had promised his support reneged, he said.
Two income tax plans remain on the table. They are:
• House Speaker Jimmy Naifeh's 4.5% income tax, which would raise $970 million and roll back some sales taxes.
• A 6% income tax that abolishes the state's 6% sales tax. A 2.75% local sales tax would remain in place. The plan still lacks a vote or two in the Senate for passage, Sen. Jerry Cooper, D-Morrison, said.
The ''6 and 0'' plan by Lt. Gov. John Wilder and Kyle was being tweaked yesterday in part because initial estimates that it would raise $1.2 billion were wrong.
Also, a component that would impose a 9.75% tax on amusements, restaurant bills, rental cars and hotel charges — which tourists would typically pay — is likely to be lowered to 8.75%, the rate now in effect in parts of the state, Kyle said. In exchange, taxes on business property and profits probably will be raised, Kyle said.
Dave Goetz of the Tennessee Association of Business said the state already had the third-highest franchise tax in the nation. Corporations pay 25 cents per $100 of property value.
Committee's rollcall vote
Here is the Senate Finance Committee roll call on the Continuing Adequate Taxes and Services proposal, which was defeated with five members voting yes and six voting no.
Yes: Ward Crutchfield, D-Chattanooga; John Ford, D-Memphis; Joe Haynes, D-Goodlettsville; Micheal Williams, R-Maynardville; Douglas Henry, D-Nashville.
No: Ben Atchley, R-Knoxville; Tim Burchett, R-Knoxville; Bill Clabough, R-Maryville; Gene Elsea, R-Spring City; Jim Kyle, D-Memphis; Bob Rochelle, D-Lebanon.