Exemptions mean state earns less and less from sales tax - WMC Action News 5 - Memphis, Tennessee

Exemptions mean state earns less and less from sales tax

NASHVILLE, Tenn. (AP) - Exemptions to sales and use taxes are projected to cost the state almost $2.7 billion next year.

And legislators keep proposing more. This year alone, they have introduced bills with exemptions for kerosene, flatbed farm trucks, poultry feed, residential solar panels and football merchandise, among other things.

Fuel exemptions alone will cost the state about $1.1 billion next year, according to the state Revenue Department. But the other $1.6 billion includes lost revenue from exemptions for gym fees, taxidermy, utility poles, and admission fees to beauty pageants and rodeos.

The result is that the percent of the state's economy that is taxable is decreasing while taxes are increasing to make up for the myriad exemptions.

In 1976, the state sales tax was 4.5 percent. Now it's 7 percent with a 5.5 percent tax on food.

Information from: The Tennessean, http://www.tennessean.com

(Copyright 2008 by The Associated Press.  All Rights Reserved.)

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