Strong business tax collections drive Tenn. revenues in March

Associated Press • Apr 12, 2007 at 9:54 AM

NASHVILLE - Tennessee tax collections were nearly $70 million higher than expected in March, the state Department of Finance announced Thursday.

Tennessee has collected $185 million more than originally projected since the state budget year began in July.

Finance Commissioner Dave Goetz acknowledged that March revenues were strong, but warned that the high collections might reflect businesses paying their taxes in advance of their April deadlines.

"We typically expect about 25 percent of total franchise and excise collections in April, but it is possible that some large corporations paid their tax liability early," Goetz said in a release.

For the first eight months the budget year, corporate taxes were over-collected by nearly $161 million. Franchise and excise taxes were $44 million above the projections in March.

Sales tax collections, by contrast, have come in nearly $49 million below the year-to-date expectations. Goetz stressed that the state's comfortable revenue situation is driven by corporate tax payments.

"The additional collections in Tennessee are not from an increased burden on individual taxpayers or even increased spending by individuals, but the additional revenues are coming mainly from large corporate taxpayers," he said.

Senate Republicans have been calling for tax relief measures after a string of strong budget years. But administration officials caution that revenue collections are due to strong franchise and excise tax collections, which are volatile and notoriously unpredictable.

Nevertheless, Senate Speaker Ron Ramsey has used the existence of an expected budget surplus as reason to push for a tax break this year. Ramsey, R-Blountville, is calling for up to a two-month sales tax holiday for food at the end of the year.

"Businesses don't pay taxes, people pay taxes," Ramsey said last week. "If you raise taxes on businesses they've got to pass it on in terms of higher fees, higher costs of services."

"So I'd rather give it straight back to the people than to back to the businesses, because I think that would do better to help those that pay the taxes," he said.

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