Five guber candidates support collecting sales tax from out-of-state retailer sales to TN customers; differ on how to use resulting revenue

Five candidates for governor – Republicans Randy Boyd, Beth Harwell and Bill Lee along with Democrats Karl Dean and Craig Fitzhugh – praised a U.S. Supreme Court decision last week that means Tennessee can now require out-of-state online retailers to collect sales taxes on purchases made by their Tennessee, reports the Times Free Press.

Their comments came at a gubernatorial candidate forum hosted by the newspaper Monday in Chattanooga. One major GOP candidate, Diane Black, was campaigning in Carter County Monday and did not participate.

The Republican candidates said the money, which may approach $450 million annually, could be used to either cut the state’s general sales tax rate of 7 percent or to reduce corporate taxes on businesses to encourage growth, as well as for some state programs.

Democrats said the money could be used to boost education, including teacher pay, as well as health care and other areas of state responsibility.

…”I certainly would look to move forward with taxing internet sales,” Dean said. “No. 1, I believe we need the revenue, and No. 2, it’s a matter of fairness.” He said he would work with state lawmakers if elected and would hope to put the money toward education.

Lee said he believes it’s “important to look at protecting the businesses in this state to make sure the tax structure is fair.” Currently, out-of-state retailers with no physical presence in Tennessee such as an office or store have an unfair advantage over traditional brick-and-mortar businesses, he said. Lee noted that Tennessee business taxes are high.

Other candidates agreed from various perspectives.

“Remember, these are not new taxes but folks are supposed to pay [these] but haven’t because there was not any means,” Fitzhugh said. The money is “something we can use to pay our teachers better,” Fitzhugh added, also noting some could be used to help guard state coffers against a future recession.

Harwell said that “something I’ve wanted to do for a long time is lower our sales tax” in a state where state and local sales taxes are among the nation’s highest, later adding, “I would do it in a sense that it would be revenue neutral to [consumers].”

Boyd said that while the issue is ultimately up the General Assembly for disposition, he agreed with Lee’s characterization that Tennessee’s 6.5 percent business franchise and excise tax rate is among the nation’s highest business taxes and impairs the ability to draw new companies here. He also said he would look at cutting sales taxes on healthy foods to spur consumption and use proceeds to boost education and “tackle” the state’s opioid crisis.

Note: The Johnson City Press has a report on Black’s campaigning in Elizabethton Monday afternoon with state Sen. Rusty Crowe (R-Johnson City), HERE.