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How the IMPROVE Act will Affect Your Business

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The Chamber’s Public Policy team works for you to help create a business-friendly environment so your business can thrive in Memphis. There is a current issue that affects our local economy and thousands of employers in the Memphis region: the need for infrastructure investment.   Governor Haslam has proposed the IMPROVE Act (Improve Manufacturing, Public Roads and Opportunities for a Vibrant Economy) that will fund critically needed improvements to our infrastructure.  We support this proposal not only because of the tremendous investment it will allow directly in Memphis, but also because of the tax reductions that it provides to bring more jobs to our community which will help our businesses grow.

Background:

Many of our state’s roads and bridges are in bad shape, causing congestion, delays, accidents, and damage to goods in transit.  In fact, the road conditions in Tennessee cost Memphians approximately $516 each year on average due to costs like extra repairs and the extra gas they have to purchase.  Additionally, the extra costs businesses incur from delays and damaged goods are passed along to customers.   

Typically, transportation related infrastructure is funded through fuel taxes, but Tennessee’s fuel taxes have not kept pace with the cost to maintain the quality of our roads, because the State has not raised fuel taxes since 1989.  Can you imagine operating your business without adjusting your prices for twenty years?  That is a model that is not sustainable, and we are grateful for Governor Haslam’s recognition of this and leading the development of a solution that not only addresses the need but also helps attract advanced manufacturers to Tennessee. 

Currently, Tennessee’s tax structure is not as attractive as compared to surrounding states when it comes to attracting good paying advanced manufacturing jobs to the state.  That is because the state taxes manufacturers whose facilities are based in Tennessee (and providing jobs to Tennesseans) more than it taxes manufacturers who produce goods out of state but sell those goods in Tennessee. This tax structure decreases the chance of Tennessee attracting manufacturing companies.   The IMPROVE Act contains a provision to address this disparity, which would help us attract more of these manufacturers and make Tennessee more competitive with surrounding states. 

The Governor’s plan is currently under consideration in committees in both the House and Senate in the Tennessee General Assembly, with various amendments being added by members of the legislature.  The Governor’s general plan is to pay for improvements to roads by imposing a modest increase in the taxes on fuel consumption for both gas and diesel fuel while at the same time, reducing taxes on groceries for Tennesseans. The tax increase will be exclusively dedicated to improving Tennessee’s roads. This means that drivers who live in other states and pass through Tennessee will be helping to pay for the improvements to roads they use.
 
What This Means for Memphis

If legislation passes that aligns with what Governor Haslam has proposed, it will immediately benefit those who live in Memphis and Shelby County because the State will have a dedicated funding stream to improve roads and bridges. Specifically, the Tennessee Department of Transportation can begin construction on many road projects in Memphis and Shelby County, including Lamar Avenue which will result in over 1,500 new jobs and $83 million in new personal income infused into our economy.

In summary, the main benefits of this proposal include:
1.  Memphians and business owners will spend less money on maintaining their vehicles.

2.  Customers will spend less for goods and services as the price to transport goods goes down due to improved road conditions.

3.   Reducing the grocery tax for Tennesseans while raising the tax on fuel is a net benefit to people who live in the state. The increase in gas tax for Tennesseans is partially offset by a reduction in the grocery tax, while those who use our roads but live outside of the state will not receive the benefit from the grocery tax reduction. This will allow Tennessee to more accurately capture tax revenue from those who get the benefit of using our roads but live elsewhere.

4.   The adjustment to the tax for manufacturers will allow us to attract more businesses to our community, providing more opportunities for growth and investment.

This legislation will help the Chamber’s Economic Development team attract more jobs and investment to Memphis, providing you with more customers and lowering the cost of doing business here. We will continue to watch as this legislation makes its way through the State Legislature and will keep you informed of how this will impact your business.

View the Chamber’s 2017 State Legislative Agenda.
 

Posted: 3/22/2017 4:13:53 PM | with 0 comments




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