Local business news in brief
Jan 31, 2007 at 8:27 AM
Bredesen asks for streamlined tax delay
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NASHVILLE - Tennessee Gov. Phil Bredesen said Wednesday that the state is not ready for a streamlined sales tax and that he will ask the legislature to delay starting one by several years. Without a change in the law, the new sales tax system is scheduled to go into effect in July. The biggest change under the plan would be that sales taxes would be collected where a product is delivered, rather than where it originates. Proponents say the streamlined sales tax is needed for states to properly tax items bought online or from out-of-state catalogs. But intrastate commerce would also be affected by the changes, and cities worry that their tax bases would be significantly eroded if they can no longer collect taxes on items made in their jurisdictions but sold elsewhere. "That would be very disruptive in this state," Bredesen said. "It causes huge changes in flows of tax revenues between communities." And under current projections, the state would not gain enough tax revenue to make the change worth it, he said. "If we're going to get $200 million or $300 million of new revenue out of it, I'd ask communities to do it," Bredesen said. "But we're not there yet."