Update on the Governor's IMPROVE Act

Date: March 28, 2017

In February, Gov. Bill Haslam unveiled the IMPROVE Act, legislation intended to pay for road improvements. Based on feedback from our members, NFIB took no position on the governor’s original proposal.

The plan, however, has evolved as it’s moved through committee.

Several of the changes have been positive, including removal of indexing in both versions of the bill. This change was a priority for NFIB since it polled highly with our members.

Another change is a reduction of the gas tax increase from seven cents to six cents and the diesel tax from 12 cents to 10 cents. Both increases would be phased in over three years. An alternative fuel tax of eight cents over three years also was added.

A decrease in the sales tax on food has been adjusted from ½ cent to a full cent—from the current 5 cents to a proposed 4 cents. The single sales factor option for manufacturers who pay F & E taxes has remained. 

Last week, a House committee largely agreed with a Senate committee amendment allowing 12 local governments to hold local option referenda to enact surcharges on various taxes for the specific purpose of paying for transit improvement programs (TIP) such as light rail and bus transit.

Most of the 12 counties with TIPs listed are in Middle Tennessee.

Taxes eligible for surcharges via local referenda include the business tax, hotel and occupancy tax, residential development tax, sales & use tax, and motor vehicle tax (or wheel tax). Originally, only the sales & use tax was listed as eligible for local option referenda.

NFIB and other business groups are concerned with the scope of the proposed local taxing authority. We are working with other like-minded groups to ensure that more limitations of taxing authority for TIPs are considered.     

NFIB will maintain its neutral position on the bill. However, we will continue to work to ensure that any amendments do not hurt our members.

Related Content: Small Business News | Taxes | Tennessee

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