Tennessee communities would receive more sales tax revenue under a bill making its way through the state legislature.
Putnam County Mayor Randy Porter says the bill would lower the state’s sales tax collection fee.
“Years ago, when they were collecting the sales tax manually, it was probably a big undertaking, but now everything is electronic,” Porter said. “There’s a bill out there to lower the fee from 1.125 percent to .5 of 1-percent. That may not sound like a lot, but that could be as much as $1 million for Putnam County in the future.”
Putnam County Commissioners have approved a resolution urging lawmakers to lower the fee. Several other local governments have also passed the same resolution.
Knox County State Senator Richard Briggs sponsored the Senate version of the bill. He said the logic stems from a change in how the state collects sales tax.
“That (the fee) was probably appropriate in the old days when things were done by hand,” Briggs said. “but in the modern day, where computers take care of that, it’s just a matter of entering it into the computer and then having the computer do an electronic transfer back to the counties.”
A fiscal note estimates the bill would cause a loss of nearly $18 million in state revenue.
The bill has advanced to the Finance, Ways, and Means Committee in both the House and Senate.