Sales taxes are generally not very popular, even though they usually are somewhat disguised by being included in purchase prices.
In Tennessee, there is a 7 percent state sales tax, with additional local option sales tax rates up to 2.75 percent.
Combined, they are a hefty levy.
Many governments — federal, state and local — are having a hard time these days as the current economic recession has resulted in not enough tax collections to cover governmental spending. But many taxpayers are having economic problems, too, in this time of recession. So this is not a good time (is there is ever a “good” time?) to raise taxes.
But since Tennessee is reported to be facing a large budget shortfall, Gov. Phil Bredesen is said to be asking Tennessee’s legislative leaders to consider the possibility of raising taxes by eliminating the sales tax cap on big-ticket items, to collect $85 million.
The suggestion is not to apply the tax increase to cars, boats and manufactured homes — but to add a 2.75 percent levy on “luxury” items such as jewelry, furs and expensive furniture, including a hit on businesses for furniture and computers costing more than $3,200.
Such a tax increase might not immediately be evident to most people. But since the increased tax would take many millions of dollars out of the general private economy, it would have a negative “trickle down” effect on all Tennesseans.
Gov. Bredesen has been a good and popular governor. It would be unfortunate for taxpayers to have to pay higher taxes now for anything, and it would be unfortunate for the governor to have his good record tarnished and remembered for any kind of undesirable tax increase in a recession.
Our legislators have a difficult challenge to address our current economic problems, but should avoid any tax increase.