One way to offset Town of Farragut’s reduced amount of Hall Income Tax revenue, according to Knox County Commissioner John Schoonmaker, is getting relief from the Sales Tax Administration Fee.
“That’s what the [state] Department of Revenue charges the City of Knoxville, Knox County and the Town of Farragut to get their sales tax returned to them,” Schoonmaker, representing 5th District that includes Farragut and Concord, said during an annual meeting of local and state leaders. “Rep. [Jason] Zachary introduced a bill last year [to eliminate the fee] but it was exclusively for Knox County. That didn’t go forward.”
Schoonmaker and Zachary, [R-District 14 including Farragut and Concord], attended the annual meeting of Commissioners, Knox County Board of Education representatives and local state elected officials at Dead End BBQ, Sutherland Avenue, in the morning and early afternoon Thursday, Dec. 7.
“Now we’re going to go statewide with it and make it for all the counties and municipalities,” Schoonmaker said.
To abolish the administrative fee “is the right thing to do,” he added. “The City of Knoxville loses $1.7 million [annually] on this fee. Knox County loses $525,000 and the Town of Farragut loses $140,000 a year” because of the fee.
“Total sales tax for Farragut [for 2016-17 fiscal year] is $12,165,032. That number is less the administrative fee, which at 1.125 percent is $136,856.61,” stated a press release from David Smoak, Town of Farragut administrator.
“The Town gets half of that total sales tax [minus the fee], which is $6,082,516. The other half goes to Knox County Schools,” Smoak further stated.
“So it would be more accurate to say that, if the fee was discontinued, the Town and Knox County Schools would gain $136,856.61.”
Zachary “is going to carry the bill into the [state] House of Representatives, and I’m sure [state] Sen. [Richard] Briggs [R-District 7 including Farragut] is going to do the same in the Senate,” Schoonmaker said about the upcoming General Assembly session. “[Briggs] supported us last year on this.”
“Last year it failed just because it was a Knox County application,” Zachary said. “When you look at it as a statewide application, the counties and the municipalities are paying $30 million a year to simply get their tax dollars back that we submit to the state — and that’s a problem.
“Commissioner Schoonmaker has done a fantastic job of creating an awareness among the county commissioners statewide,” he added. “And it’s our job to do that with legislators, to let people know that we’ve reached a point now where [it is unlike] back in the ’80s, where [the fee] was feasible because there was more overhead involved.
“Now the [fee] process is so electronic, the overhead and the requirements are not there. So you’re got $30 million in county and municipality dollars staying with the state as a fee.”
In terms of a possible legislative compromise, Zachary said, “Possibly looking at the [fee elimination] as a phase-out as we did with Hall Income Tax.
“We want to do all we can to alleviate some of the budget challenges with the municipalities and the counties,” he added.