Tennessee Senate Bill SB2326

Tennessee 2023-2024 Regular Session

• Introduced: 1/30/24

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 7, Part 2, relative to the severance tax.

Impact

The proposed bill is aimed at providing counties with the flexibility to generate revenue from natural resource extraction while ensuring that such decisions are made democratically through local governance. Furthermore, the bill includes a provision that mandates annual increases to the maximum tax rate based on the change in the average consumer price index, which ensures that the revenue generated keeps pace with inflation without exceeding a 4% increase per year. This aspect of the legislation is intended to maintain the financial viability of the tax over time.

Summary

Senate Bill 2326 proposes an amendment to Tennessee Code Annotated, specifically addressing the severance tax on certain natural resources. This bill allows counties with populations between 7,500 and 7,600 to set a tax rate of up to 45 cents per ton on sand, gravel, sandstone, chert, or limestone extracted from local lands. The legislation requires that any changes to the tax rate be made through a two-thirds majority vote by the county's legislative body, reflecting a move towards empowering local governments to manage their own tax structures.

Contention

While the bill is designed to empower specific counties, it may also introduce disparities in revenue generation across other counties not falling into the designated population range. Critics may argue that this could lead to inconsistent tax policies statewide, where wealthier counties could benefit more from this local taxation power compared to their less populous counterparts. Moreover, the thresholds set for population and the type of resources taxed may raise questions about equity among regions, which could lead to calls for broader statewide tax reforms in the future.