As of Friday, May 27, Gov. Bill Lee has ratified a bill that removes sales taxes from silver and gold bullion, becoming the 42nd state to do so.
The state legislature’s companion bills — Rep. Bud Hulsey’s House Bill 1874 and Sen. Frank Nicely’s Senate Bill 1857 — were passed by both chambers last month, and the new law went into effect upon Gov. Lee’s signing thereof, which grassroots organizations who have long advocated tax-free metal exchange. The bill’s passing raises Tennessee’s rank on the Sound Money Index from 36th to ninth. The mark of grassroots support was recognized from the floor during the senate’s vote.
“I’d just want to thank the senator for bringing forward this bill along with half of the state of Tennessee that contacted all of us,” said Sen. Janice Bowling.
Among such advocacy groups were Campaign for Liberty, Money Metals Exchange and Sound Money Defense League who attribute their work to the notion that passage of this bill affords the state’s small businesses and investors to acquire not only gold and silver but also palladium, platinum and coinage without taxes that, in some places, had risen as high as 10 percent.
The traditional taxation of metals is broadly considered unfair to investors and savers because bullion are kept as a kind of savings and investment, yet other financial instruments — bonds, currencies, ETFs, or stocks — seen as forms savings and investment go untaxed. Gold and silver are specifically held for the purpose of resale, which makes it ostensibly inconsistent. Sales taxes are primarily levied on final consumer goods — the term, final, referring to the fact that these goods reach the consumer usually for their use rather than their resale. The use of the metals in question is primarily resale.
Proponents of the new law also cite harm done to native businesses by that taxation now that so many other states have already repealed sales taxes on gold and silver bullion. Competition drives buyers of precious metals to neighboring states where sales taxes are lower or nonexistent, and even within the state, buyers will travel to counties and cities where sales tax rates are lower than in their area. The same effect has become a determinant for where coin conventions are hosted.
Lead sponsor Hulsey said, "I've been working to free gold and silver from sales taxes in Tennessee since my kids were in elementary school. The Sound Money Defense League, in-state dealers and folks all across Tennessee made their voices heard and helped get this bill across the finish line."
This is especially important now as rampant inflation plagues the nation. The average buyer of precious metals is not a wealthy investor but, rather, someone of perhaps middle-class means seeking to protect savings or pension income from the effects of inflation by investing it in gold bars for example.
J.P. Cortez, policy director at Sound Money Defense League addressed the state House’s Finance, Ways and Means Committee as the bill was being considered by legislators. He said, “At a time of record-high inflation, Tennessee shouldn’t be punishing citizens with sales taxes for choosing to protect the purchasing power of their savings with sound money.”
Cortez added, “the vast majority of states realize that taxing sound money harms in-state investors, in-state businesses and even state revenues.”