State Government ReopensThis morning’s Knoxville N…

State Government Reopens

This morning’s Knoxville News Sentinel reports that the state government will reopen when the governor signs the bill passed by the state’s legislators yesterday. Whether this is the right compromise remains to be seen, but at least it is a compromise that will work for the moment.

The News Sentinel points out:

People with low income levels are hit the hardest by the levy, they said, and the higher rate will send more Tennesseans across state borders or to the Internet for shopping.

Rep. Ken Givens, D-Rogersville, said the penny-per-dollar increase translates into a 17 percent increase in the sales tax and predicted political opponents will quickly point that out. The bill also amounts to the largest tax increase in Tennessee history.

The present state sales tax rate is 6 percent and the bill will raise that to 7 percent – except on grocery food. On food items, the rate will remain at 6 percent. Local governments can add up to 2.75 percent in sales tax, putting the combined maximum level at 8.75 per cent now and 9.75 percent under the bill.

In Knox County, the local rate is 2.25 percent and the combined rate 8.25 percent. The bill will raise that to 9.25 percent.

The sales tax increase, which takes effect July 15, would produce an estimated $600 million.

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