State Tax Update Archive
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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.