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Tax
Alert
A bi-weekly Report by
Damon B. Ansell and Kate Meerstein
Volume 6 Issue 30
June 6,
2000
Governor Sundquist (R-TN) to Veto
Taxes?!
The Tennessee House
unveiled their budget plan on Tuesday that included new energy taxes
and excise taxes. The
plan would enact a 2% tax on residential energy (natural gas,
electricity) and increase the 1.5% tax on energy used by
manufacturers to produce a product to 2%. The plan would also increase
taxes on beer, wine and liquor by 5% and cigarette taxes would go up
a half-cent per pack.
Governor Sundquist has said that he will probably veto any
budget that does not reform the state tax structure. What he really means is that
he will veto anything that does not include a state income tax. Tennessee is one of 8 states
that do not have an income tax. The governor believes that
it would be a long-term solution to the state’s revenue issues
including a $300 million budget deficit.
ATR and tax activists
point out that throwing more money into a broke system is not the
answer. The answer is
really reform and a serious look at Tenn Care a failing health care
program that ironically Republicans warned would fail at its
inception.
California Assembly Passes Internet
Tax Bill
California, a state
that has seen a great deal of economic prosperity from the high tech
industry has passed a bill through the state assembly that would
inherently tax the Internet.
The bill clarifies state law regarding Internet taxation and
broadens the definition of nexus. This legislation would apply
some sort of tax to companies that have partly or wholly owned
subsidiaries of retailers, and also define that nexus exists merely
by a company having a single sales representative in the state,
among other provisions.
The nexus definitions have been broadened so much by this
proposal that somehow, someway companies with an Internet presence
will have to collect California sales and use taxes.
This legislation
barely got through the Assembly and still has to get by the Senate
and Governor Gray Davis, who is generally opposed to Internet
taxation. Early
indications are that the governor will veto the proposal.
Louisiana Legislature Down to the
Wire
The Louisiana
Legislature has to adjourn June 7 according to the state
constitution and they still have no definite plans to bridge the gap
of a $374 million
dollar hole in the state budget. The House had passed $155
million in new taxes to the Senate for approval and the Senate
turned around and made those tax increases into $260 million worth
of excise taxes. Now
the House has to approve these changes with a 2/3 vote according to
their supermajority requirements. The new taxes sent back to
the House for approval are:
A 30-cent-a-pack
cigarette tax that left the House at 24-cents-a-pack, a 5% tax on
beer, wine and liquor purchased for on-premise consumption, and an
increase on riverboat net gaming proceeds from 18.5% to 26.5%. If the tobacco tax is not
returned to the way the House passed it, it probably won’t make
it. The rest of the
taxes are negotiable according to some members of the
House.
But You Promised
Governor Jeanne
Shaheen (D-NH) announced her bid for reelection and at the same time
refused to renew her pledge to veto an income tax. She stated that she has made
the promise twice before when she ran for governor and she fought
hard to keep it but this time she was not going to be able to make
the promise…”whatever the political price.” We’ll see what happens in
November. Tax Alert and
ATR are working to secure a signed pledge from Republican
front-runner Gordon Humphrey.
This would set up a clear choice for voters in New
Hampshire. One supports
raising taxes; the other will oppose any such action.
Arizona feeling the
heat, calls special session
Governor Jane Hull has called a special
session this week because she wants to put a 0.6% sales tax increase
on the ballot in November for education purposes. She needs a lot of votes to
get this measure passed which explains why she is going for the
ballot because Arizona has a 2/3 supermajority requirement for tax
increases and putting this on the ballot only takes 50% + 1 of the
state legislature.
For more information,
contact Chad Cowan at 202-785-0266.
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