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Knoxville News-Sentinel (Tennessee)

Knox County may be asked give up a tax that brings more than $200,000 a year to its coffers.

"That's what I would like to see happen," Knox County Mayor Tim Burchett said Wednesday.

Burchett plans to ask Knox County Commission to repeal the county's portion of the local amusement tax in its next work session Aug. 18.

"We can budget it," Burchett said, adding that amusement tax revenues Knox County would lose could be absorbed in future county budgets.

Tickets to sporting events and movies in Knox County include a 5 percent tax that's divided between Knoxville and Knox County. Most of that money goes to Knoxville, 4.5 percent of the tax levied. The remaining .5 percent goes to Knox County.

Burchett said that money pays for maintenance at the county's parks.

He said the repeal is part of his low-tax platform, and Burchett would like more cuts.

"I don't think commission has the stomach for large, across-the-board cuts," Burchett said. The $227,485 Knox County collected in amusement tax in 2013-14 is small compared to the county's $727 million 2014-15 budget.

"It's hard for us to argue the use of that tax," Commission Chairman Brad Anders said. "On the city side, it's a completely different conversation, with game day services offered."

City officials have said previously the amusement tax helps compensate for resources and infrastructure used, particularly by the University of Tennessee, on game days.

The tax itself also has been used to pay off bonds for building UT's Thompson Boling Arena, Burchett and other officials said.

Knoxville city officials did not comment on repealing the amusement tax, which collected about $2 million in the last fiscal year.

Amusement taxes are common in American cities, according to William Fox, an economics professor and director of the Center for Business & Economic Research at UT.

Hotel/motel tax revenues are often considered similar to amusement taxes by economists, according to Fox.

"The norm around Tennessee is, while the tax exists, it's not funding local government," Fox said. "It's funding tourism activities."

A hotel/motel tax in Nashville, he noted, is helping to pay for a convention center. Here the money goes to pay for Visit Knoxville operations, which markets the area to tourism and works to attract events.

"You go to some big cities, like San Francisco and Washington, and the combined hotel/motel tax can be 15 percent or more," he said. "The idea, generally, is to tax tourism."

August 7, 2014
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