NASHVILLE - An amended version of Gov. Bill Haslam's gas tax bill cleared a key House panel today on a voice vote and is now headed to the full Finance Committee.
The major change by the Budget Subcommittee was taking a provision boosting local property tax relief for veterans and inserting the language in a stand-alone bill which members passed first.
"Many of our members are unhappy that we've tied veterans' benefits with the road building issue," Budget Subcommittee Chairman Gerald McCormick, R-Chattanooga, explained.
Senators had inserted the veterans' relief provisions, the subject of a number of stand-alone bills, into their version of the IMPROVE Act. The bill raises gas and diesel taxes for the highway fund but includes several tax cuts in the general fund.
A number of House members, several of whom had their own separate veterans' relief bills, oppose the gas tas. They objected to mixing the issues. Some opponents of the gas tax also objected to the inclusion of veterans property tax relief because they intend to vote against the gas tax bill and wanted to be avoid being placed in a difficult position if they did.
McCormick and Transportation Committee Chairman Barry Doss said the bill still includes more tax cuts than fuel tax increases. The bill seeks to raise gas and diesel taxes for the first time since 1989. Gas would rise 6 cents per gallon over the next three years while diesel would rise by 10 cents over the same period.
Meanwhile, McCormick said the amended IMPROVE Act bill includes his preferred alternate name for the bill. The 2017 Tax Cut Act.
"Because there's so much misinformation going around, saying it's just a big tax increase," McCormick said after his panel's approval of the amended bill. "And we're hearing from people saying why are you increasing our taxes when in fact it's a net tax decrease."
Noting Tennessee highway spending has always come from a dedicated fuel-tax funded pool of money, McCormick said "what we're trying to do is segregate the funds as we've been doing for years and years and keep the transportation funds in a separate account. Which is the fiscally responsible thing to do."
The bill's tax cuts include lowering the sales tax on groceries from 5 percent to 4 percent, altering a corporate tax to benefit manufacturers and reducing the state's Hall Income Tax on dividends and stocks another percentage point.
If the bill wins approval in the full Finance Committee, it would then go to the House Calendar and Rules Committee before getting scheduled for floor debate.
The Senate bill is in the chamber's Finance Committee with Senate Republican leaders having made it clear they would await movement from McCormick's panel before proceeding further.