Gas Tax to Increase, as Others Get Cut, in Tennessee

by | April 27, 2017

By Andy Sher

That didn't take long at all.

Gov. Bill Haslam on Wednesday signed his IMPROVE Act into law as soon as the bill reached his desk.

The bill raises gas and diesel taxes by six cents and 10 cents, respectively, over a three-year period, as well as several fees, including a $5 increase on annual car registrations.

It would bring in an estimated $350 million for the state's dedicated highway fund, as well as local governments' road and bridge needs.

But the new law also cuts several taxes in the general fund by some $410 million, including a 20 percent reduction in Tennessee's 5 percent sales tax on groceries.

Other tax provisions include a corporate tax change beneficial to Tennessee manufacturers, the phasing out of the Hall Tax on interest and dividend income and the restoration of state aid on local property taxes for seniors and disabled veterans.

The Republican governor later tweeted that he was "excited to sign IMPROVE Act: largest tax cut in TN history and a conservative plan to fund roads, bridges."

Tennessee's gas tax would rise from 21.4 cents per gallon to 27.4 cents while diesel goes from 18.4 cents to 28.4 cents per gallon.

Haslam said the new fuel tax revenues are needed to help tackle an estimated $10.5 billion backlog of 962 projects across the state. Twenty-two of those projects, totaling some $600 million, are in Chattanooga and other parts of Hamilton County.

Meanwhile, in legislative action on Wednesday, a scaled-down school voucher pilot project measure applying only to Shelby County is now dead for the year in the House.

Finance Subcommittee members voted to put the controversial bill off until 2018 at the request of Education Administration and Planning Committee Chairman Harry Brooks, R-Knoxville, the bill's sponsor.

The bill sought to allow parents of students in Shelby County Schools' lowest-performing schools get public money to pay to attend private schools. Memphis education leaders said it would cost the system $18 million annually and there also were questions about whether the students attending private schools on the public tab would take the same tests as public school students.

This year's bill represented an effort by voucher proponents to scale back their ambitions, which previously included what they call "opportunity scholarships" to students in five counties, including Hamilton County, attending failing schools.

(c)2017 the Chattanooga Times/Free Press (Chattanooga, Tenn.)