By AP
Nashville, TN – Tennessee Governor Phil Bredesen is proposing to lift the state's sales tax cap to plug an $80 million budget gap. Bredesen says the alternative would be a five percent reduction in salaries for all state employees.
The state currently limits sales taxes to the first $3,200 of purchases. Bredesen wants to remove that cap to allow the state to collect sales taxes on the full price of the item. The cap would remain for vehicles, boats and homes.
Bredesen says while some consumers, like those buying expensive jewelry, would be affected, the change would mostly apply to businesses. The governor challenged Republican lawmakers skeptical about the proposal to come up with their own alternative. In Bredesen's words: "You can't just say no to everything."