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Lawmakers in Tennessee OK Sales Tax Hike

July 04, 2002|From Associated Press

NASHVILLE — The state Legislature passed a 1-cent sales tax increase late Wednesday, ending a partial government shutdown and giving Tennessee its biggest tax hike in state history.

It now goes to Gov. Don Sundquist, who said he would sign it.

The stalemate over an income tax and how to resolve an $800-million deficit resulted in lawmakers failing to meet the deadline to pass a balanced budget by July 1, the start of the new fiscal year.

Sundquist was forced to furlough half of the state's 42,000 workers and keep in operation only essential services. The employees will return to work Friday, Sundquist said.

The House approved the sales tax bill 50 to 41, the minimum number of votes required for passage. The Senate passed it 22 to 11.

When the tax goes into effect July 15, Tennessee will have one of the highest sales tax rates in the country: 9.75% in 30 of the state's 95 counties.

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