IMPROVE Act Passes House Of Representatives

This week, members of the Tennessee General Assembly passed House Bill 534, the “Improving Manufacturing, Public Roads, and Opportunities for a Vibrant Economy (IMPROVE) Act” — a proposal that Governor Bill Haslam introduced in January in an effort to help fund the state’s $10 billion backlog of road construction projects.

House Bill 534 is a sustainable plan that improves the state’s infrastructure, cuts taxes at historic rates, and encourages high quality jobs that maintain Tennessee’s economic momentum. While the legislation raises the tax on gas and diesel by .06 and .10 cents respectively over a three year period, it also reduces taxes by more than $300 million annually. Tax breaks in this year’s IMPROVE Act include a $125 million decrease in the sales tax on groceries, a $113 million reduction in taxes to Tennessee’s manufacturers, and a decrease on the Hall income tax over time before it is completely phased out.

The bill’s momentum was boosted by an endorsement from the Americans for Tax Reform (ATR) organization which confirmed that the legislation’s net tax decrease meant a vote in favor would continue to honor the Taxpayer Protection Pledge signed by many General Assembly members. Americans for Tax Reform is a national conservative group formed by Grover Norquist in 1985 at the request of President Ronald Reagan. The flagship project of ATR is the Taxpayer Protection Pledge, a written promise by lawmakers and candidates for office that commits them to oppose any effort to increase income taxes on individuals and businesses.

The conservative group’s approval follows an earlier announcement in January of this year by the American Conservative Union naming the Tennessee legislature as the most conservative in the nation. Since 2011 and prior to the passage of the IMPROVE Act this week, lawmakers have cut $438 million in taxes, eliminating the death and gift tax, reducing the sales tax on food, and working to phase out the Hall income tax.

In addition to the new funding the IMPROVE Act will provide to the Tennessee Department of Transportation, local governments will also benefit. In total, counties across the state will receive $79 million and cities will see a revenue increase of approximately $35 million per year to use for local road and infrastructure projects.

Before heading to the desk of Governor Haslam to be signed into law, the House and Senate versions of the bill must first be reconciled between the two bodies, which should take place over the next week.

The full text of House Bill 534 can be accessed by visiting the Tennessee General Assembly website at: http://www.capitol.tn.gov/Bills/110/Bill/HB0534.pdf

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