“Technical Corrections” is Code Name for a Tax Hike

April 18, 2010 9:17AM

The Tennessee Center for Policy Research’s Justin Owen takes issue with the proposed $21 million cable tax hike in an op-ed in Saturday’s Tennessean. “Technical corrections” is code name for a tax hike Last week, the governor unveiled his annual technical corrections bill. Originally designed to correct minor errors and clarify vague language in state tax law, the bill has become nothing more than a laundry list of tax hikes. Ask Revenue Commissioner Reagan Farr or any of his fellow outgoing Bredesen administration officials, and the bill simply “closes loopholes” and “levels the playing field.” In reality, tax czar Farr has cunningly turned the technical corrections bill into a $64 million-a-year tax increase on Tennesseans. The most controversial of them all is a $21 million tax hike on cable customers. For more than a decade, cable customers have been exempt from paying a sales tax on the first $15 of their cable bills. This same exemption does not apply to satellite customers. Removing this exemption delights the satellite industry so much that it has hired McNeely Pigott & Fox, a powerful Nashville public relations firm, to lobby for the tax hike. This makes for terrible public policy. Tennesseans are already struggling to make ends meet, and now is not the time to nickel and dime cable customers just to appease the satellite industry. If it really wanted to level the playing field, the administration should propose lowering the tax burden on satellite providers and their customers. Instead, the satellite industry has tag-teamed with politicians to beat up on their chief competitor. Unfortunately, it will be cable customers who are left bloodied from the fight. The new tax will affect 1.5 million households across the state. These same households already pay nearly $100 million a year in state and local cable taxes, meaning this new tax will cause cable customers’ costs to rise by about 20 percent. The administration also wants to double dip by charging a tax on cable customers for the cable boxes and DVR recorders they lease. Cable companies currently pay a tax on this equipment, but the revenue-starved administration greedily wants to return to the same trough for a second drink. The bill also jacks up the tax businesses pay for using long-distance telephone service, stripping $6.5 million from businesses that could use that money to hire employees and expand their operations. Stifled job growth and thwarted production are the last two things our state needs in this economic climate. With unemployment hitting double digits and taxes already eating away at Tennesseans’ hard-earned income, legislators need to take a different approach than that put forward by Governor Bredesen and his taxman-in-chief Farr. The solution is actually pretty simple: lower taxes and reign in government spending. At the very least, there needs to be transparency in the process. If lawmakers are sold on tax increases, then they need to debate each tax hike on the merits and vote on them as separate bills, not pass them off as mere “technicalities.” Justin Owen is the director of policy and general counsel at the Tennessee Center for Policy Research, an independent, nonprofit and nonpartisan public policy organization committed to achieving a freer, more prosperous Tennessee through the ideas of liberty.