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Governor says Tennessee relies on e-sales tax
(IDG) -- Tennessee Gov. Don Sundquist said he would be forced to cut basic services unless the state collects sales taxes from Internet-based transactions.
"Without fundamental changes in our tax structure, we will be unable to prepare our people for tomorrow," Sundquist said in his recent budget address. "Without it, you will be forced to cut basic state services. I know no one wants to cut services in their districts, but what options do you propose? What cuts can you make that affect no one? They'll also do grave damage to our state."
Sundquist said local merchants were "falling prey to Internet competition," and that it was affecting state and local government.
"People actually go into the dress shop, try on a dress to make sure they like it and that it fits, and then they go home and purchase it over the Internet," he said. "The shop owner loses out on that sale, but so do state and local governments. When that sale is lost, so are the state and local taxes on that sale."
Sundquist said he refused to fund the budget with a sales tax increase because Tennessee's sales tax burden is already the seventh-highest in the country.
"It's ridiculous that we have senior citizens in this state who pay a greater percentage of their fixed incomes in taxes than our professionals and business executives, who make hundreds of thousands of dollars a year but pay almost nothing to the state in return," Sundquist said. "It's unfair, and it's just not right."
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