JOHNSON CITY, Tennessee (WJHL) – Northeast Tennessee local sales tax revenues increased 20% in the last fiscal year and 15% in the first five months of fiscal 2022, the gains the most important coming from the more rural counties.
State Representative David Hawk (R-Greeneville) said the strong rural growth is likely due to Tennessee becoming one of the last states to tax internet sales when it passed the “bill. of the Law on the Market Facilitator ”in March 2020.
“We’ve been hearing for years that sales tax is leaking from our small communities,” Hawk said Friday. “Ever since the sales tax system was in place, there have always been shopping malls that went to the biggest cities, the Nashvilles, the Atlantas, the Charlottes of the world.”
Any online business with more than $ 100,000 in annual sales in Tennessee must remit sales tax, including that from third-party payment platforms. If a Mountain City resident purchases a $ 500 piece of furniture online, the sales tax is now paid to Johnson County.
“Seeing sales tax numbers hold steady over the past two years is exactly what the state legislature intended when we passed online sales tax legislation,” Hawk said. “Now we are seeing people being able to keep the sales tax money they spent in their area. “
In the seven counties of northeastern Tennessee, sales taxes on local options – which primarily fund schools – rose $ 33.2 million between the fiscal year ending June 2020 and that ending in June last.
In more rural counties like Greene, Carter and Hawkins, that meant an additional $ 4.6 million, $ 3.6 million and $ 3.3 million over the previous year.
Hawk said many county budget managers and city managers have spoken to him about the impact of the legislation.
“They are very happy with what they see so far,” said Hawk.
“Ultimately, these sales tax dollars will improve our school systems in Northeast Tennessee,” Hawk said. “As rural Tennessee, we’ve needed it for so long and it’s finally equalizing the sales tax boundary in our area.”
The largest percentage gains from FY20 to FY21 came in counties Johnson, Hawkins, Unicoi and Carter, with Johnson topping the list with growth of 35%. This brought in nearly $ 600,000 more for education than the previous year.
Davidson County saw growth of just 5%, although this was in part linked to a slowdown in tourism in the early months of the pandemic.
Hawk said the change helps local governments keep property tax rates lower.
“It’s always a concern for local governments, they’re going to have to raise property taxes by five cents or ten cents in order to fund some of these educational initiatives that are really state-mandated,” Hawk said.
In the first five months of the current fiscal year, the trends are mostly maintained. Compared with July to November 2020, revenues for the same months of 2021 are up 15% across the region. Growth is more balanced, with Greene County highest at 19% and six of the seven counties above 13% growth.
For the two most populous counties in the region, this works out to an additional $ 4.2 million over five months for Washington County and $ 3.5 million for Sullivan County.
“No matter how many zeros you put at the end, it’s been a godsend for education in Northeast Tennessee,” Hawk said.
