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Committees to continue gas tax talks

Xavier Smith • Mar 17, 2017 at 4:16 PM

Committees in the Tennessee House and Senate are expected to continue discussion on Gov. Bill Haslam’s IMPROVE Act and its potential components.

The House Transportation Committee did not discuss the measure this week, but is expected to address it next week.

The Senate Transportation Committee approved a revised version of the transportation funding portion of the IMPROVE Act on Monday.

The amendments call for a smaller increase in fuel taxes – 6 cents per gallon for gasoline and 10 cents per gallon for diesel – to be gradually phased in during the next three years. 

Senators also expanded the revenue-offsetting tax cuts to include revisions to a property tax relief program for service-connected disabled veterans and a further decrease in the sales tax on food, according to the Tennessee Chamber of Commerce and Industry.

While the user fee increases will be phased in, the tax cuts outlined in the proposal will have immediate effect. 

Lt. Gov. Randy McNally praised the committee's approach and called it strong and fiscally responsible in a year of large budget surpluses.

"The bill as amended is now beyond revenue-neutral. It is a clear and undisputed tax cut for Tennesseans. It has my unequivocal support," he said. 

The bill will appear in the Senate State and Local Government Committee next week.

Haslam’s original plans called for an increase to the road user fee or gas tax by 7 cents for a gallon of gas and 12 cents for a gallon of diesel fuel and an increase in car registration fees by $5 for the average passenger vehicle, which is expected to bring in $278 million in new money for backlogged transportation projects.

Amendments to the governor’s original plans took place in both houses, which led to conversation about which version of the bill should ultimately make it onto the full Senate and House floors.

Prominent economist Art Laffer presented his take on the proposed IMPROVE Act last month during the first day of hearings regarding the potential plan.

“We don’t need more taxation in the state of Tennessee. We don’t. You don’t need to spend everything you get. When I look at the situation here, highway funding does appear to be a very needed activity. That’s true, but we don’t need to raise taxes and cut taxes that are temporary,” Laffer said. “We need to keep our taxes low and when you get extra revenues in, you want to make darn sure that you use those revenues to continue to control taxes.”

Laffer said he believed the state should take aim at reducing the franchise business tax in the state, which he called a job and business killer.

 

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