Thursday, January 5, 2006
Dear NTC Members and Partners:
Ref: State Hearing on proposed Property Tax on Software,
January 23, 2006, 10:30 a.m., Nashville
Thanks to several weeks’ transition into my interim appointment as NTC President
and CEO, and an opportunity to work closely with outgoing NTC President Ray Capp and the
staff of both NTC and the Nashville Area Chamber, I have been able to follow closely a
proposal that would add a new tax on computer application software.
Without exception, the NTC Members who have contacted us about this proposed
tax are highly concerned that, if implemented, it would have severe consequences for the Information
Technology sector and for their individual enterprises. Executives with some
large corporations have cited seven-figure annual cost increases.
If you haven’t heard about this, let me provide some basic information here,
and ask that you consider making your views known in this matter.
1. The Tennessee Board of Tax Equalization will hold a public hearing
on its Notice of Proposed Rulemaking, January 23, 2006, at 10:30 a.m. CST (17th Flr. Conference room, Polk State Office. Bldg, Deaderick St., Nashville). No advance registration is required.
2. The Board has indicated it fully expects to hear from businesses with
concerns about the tax proposal, and a number of companies have told us they plan to be
represented on January 23. (If you are interested in knowing more about businesses that are
coalescing around this issue, we are advised that you may obtain information by writing Charlie Trost of Waller Lansden.)
3. The Board’s proposed Rulemaking has raised in some minds issues regarding
the constitutionality of the Board's initiating this action, given that raising
taxes is generally in the hands of the General Assembly.
4. Some opponents of the tax increase warn that such a new levy would inevitably
hamper the formation, profitability and recruitment of the most innovative businesses
in Tennessee – and could even lead some businesses to relocate some IT operations to lower-tax
states.
This initiative may signal a longer-term effort to increase State revenues, through
administrative or legislative means. Thus, we will follow these and related issues,
and would welcome any information you have, at any point.
Often during the past thirty years, I have dealt with sales- and property-tax
issues, as they pertain to substantial technology investments. I know, as I suspect
do you, that new taxes on technology invariably have far-reaching and often unforeseen
consequences.
I plan to attend the January 23rd hearing, and I hope you will consider being
there, too. Either way, NTC will keep you abreast of what we learn, and what actions
we might subsequently take. Meanwhile, please do not hesitate to let me know your
thoughts on these and other matters. My telephone is (615) 743-3161 and my e-mail
is here.
It is a real privilege to join with you in advancing NTC, particularly when major issues such as these arise.
Sincerely,
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