Voters To Decide If Local Option Sales Tax Rate Should Be Increased

May 22, 2006
by: 
Dwayne Page

The DeKalb County Commission Monday night adopted a resolution calling for a referendum seeking authorization from the people of DeKalb County to increase the local option sales tax in DeKalb County from the current rate of 1.5% to the maximum of 2.75%.

The question, as recommended by the county budget committee, will be put before the voters of DeKalb County on the August 3rd General Election ballot.

County Mayor Mike Foster says under a 1967 agreement that still exists between the county and the city governments of Smithville, Alexandria, Liberty, and Dowelltown, a majority of the local option sales tax revenues that are generated help fund the school system. \"If agreeable to the cities and the school board, this additional money, would go to the local purpose fund to finance school debt service and operations. It is projected to raise approximately $850,000 in additional sales taxes. Part of this money would go to the cities, but if they continue the current agreement, they would be contributing to the local purpose fund up to 66% of the new revenue to schools\".

Of the 95 Tennessee Counties, 33 have a local option sales tax rate of 2.75%, 39 have a rate of 2.25%, six counties have a rate of 2% and 14 counties have a rate of 2.50%. Cannon County's rate is 1.75%. Only DeKalb and Johnson County have a local option sales tax rate of 1.5%.

Foster says by increasing the rate, the county government would be in a better position financially, should the state government decide to keep a portion of the local option sales tax revenue, as is being considered.; and he says, more sales tax revenue could keep the county from having to enact drastic increases in property tax rates in the future.

Proponents of the increase also argue that consumers, whether they realize it or not, are already paying more sales taxes when they shop in other counties, where the rates are higher and tax money spent in those counties goes to fund their local governments and schools.

The overall sales tax rate in DeKalb County is 8.5%, including 7% state and 1.5% local.

If approved, the new rate for DeKalb County would be 9.75%, including 7% state and 2.75% local.

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