Lee opposes franchise tax measure

Transparency clause backed by House GOP

Tennessee Gov. Bill Lee opposes a House Republican effort to enact a transparency clause in pending legislation that would administer a massive franchise tax refund in the state.

The House and Senate are currently at odds over the legislation. Each chamber passed its version of the bill in recent weeks and will hammer out their differences in conference committee within the next few days.

The House version would allow businesses to seek a one-year refund of a franchise tax some state officials say must be handed out to avoid a costly lawsuit. The House's plan would also require the state to publicly list businesses who benefit from the refund.

Lee on Monday said a public list of companies would be "unprecedented," rare public comments from a governor who typically sidesteps specific questions on pending legislation as it makes it way through the General Assembly.

Meanwhile, House Speaker Cameron Sexton, Rcrossville,

said last week their transparency clause is "non-negotiable" for the House as it enters into talks with the Senate.

"I can't speak to how they will determine the final version, but I think that we shouldn't be taking private information of individual or companies tax information that the government has and making it public," Lee said. "Private information should not be exposed to the public."

House leaders disagree that their version would expose private tax information, but House lawmakers have said Tennessee taxpayers have a right to know the company name and total tax refund received. All other tax information would remain private.

Under the House plan, companies who take a refund from the state would also have to waive their right to sue over the franchise tax in the future, as lawmakers have argued they're pushing this legislation under the specter of a potential lawsuit.

Sexton indicated this will also be a non-negotiable for the House as it enters conference negotiations.

The House version is a one-year look back, which would stand to save Tennessee money compared to the Senate's three-year look back, expected to cost Tennessee $1.5 billion in refunds and $400 million in ongoing tax breaks.

Democrats remain critical of the legislation and the justification behind it as Republicans have argued Tennessee must restructure the franchise tax to avoid a lawsuit.

The Lee administration initially proposed the bill, and GOP lawmakers have continually raised the prospect of litigation as justification to make the change. Republican lawmakers have said they're acting on the advice of Attorney General Jonathan Skrmetti, even as the oft-cited legal threat has been kept secret regarding which companies have pushed for the tax change.

In March, 16 of 25 Republican Senators declared a Rule 13 personal interest before voting for it, while Lee has taken criticism for potential benefits to his private company. Lee has said he is unaware of whether the company could benefit, citing a blind trust that was initiated prior to his taking office. One Democrat, who voted against the bill, also declared a Rule 13 personal interest.

Lee on Monday said the change is needed to maintain an "attractive" tax environment for companies looking to invest in Tennessee.

"We have some of the largest companies in the world making decisions to invest here, and part of that is our tax structure," Lee said. "We're trying to maintain that tax environment that mkakes us one of the best states to do business."

Vivian Jones contributed to this report.