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When the citizens of Tennessee ring up
their purchases at the grocery store today,
“it will be a Happy New Year indeed,” says
Phil Schoggen of Tennesseans for Fair
Taxation (TFT). That’s because the state tax
on food will be reduced by one-half percent,
hailed by many as another step on the road
to tax fairness.
Schoggen adds, “This victory, on top of the
earlier victory in preventing the 2002 sales
tax increase from being applied to grocery
food, means that food is now taxed at a 1.5%
lower rate than non-food items. That’s
enough for every Tennessee family to buy
another five-and-a-half days’ worth of
groceries each year.”
During the 2007 legislative session,
Tennesseans for Fair Taxation (TFT) won a
reduction in the state food tax, paid for
with part of the increase in the state
cigarette tax. “The food-cigarette tax swap
was a no-brainer,” says Schoggen. Tennessee
had the highest food tax in the country and
one of the lowest cigarette taxes.
The sales tax on items from everything to
milk and bread to filet mignon will now be
5.5 percent as opposed to 6 percent. The
local sales tax percentage – 2.75 percent in
Carroll and Weakley counties and 2.25 in
Henry County – will not be affected.
Schoggen said the half-cent reduction would
make the most difference for low-income
families who spend a higher proportion of
their income on food.
“That’s the most regressive and harshest
penalty the state imposes on persons with
limited incomes,” Schoggen said of the food
tax.
Schoggen and others, however, think the
state could have done more to lower the food
tax in a year when the state’s coffers
overflowed with unexpected revenues
numbering in the hundreds of millions.
The Department of Revenue estimates the
state will lose about $40 million in tax
revenue per fiscal year as a result of the
tax cut.
Meanwhile, low-income Tennessee families
will put about $40 into their wallets or
pocketbooks for the year as a result of the
cut.
The change in the sales tax on food resulted
from his past legislative session, when both
Democratic and Republican state lawmakers
voted overwhelmingly for the politically
popular choice to cut one of the highest
sales taxes on food in the country.
All, however, did not favor the tax cut.
Veteran Davidson County Democratic Senators
Joe Haynes and Douglas Henry were the only
two senators who voted against cutting the
sales tax on food.
The reasoning rests on the sales tax on food
being one of, if not the most, stable source
of taxpayer revenue.
If you decrease that stable source of
revenue, Henry said, you get closer to
bringing back talks of a state income tax.
“I wouldn’t think it would amount to a great
deal in the average budget,” Henry said of
the sales tax cut.
Lawmakers like House Majority Leader Gary
Odom (D-Nashville) want to continue cutting
the sales tax on food. The goal should be to
eliminate it entirely, he said.
“I think we made a significant statement,”
Odom said of the food tax cut.
An expected budget shortfall this year –
estimated to be as high as $240 million –
could derail efforts to further cut the food
tax, however.
The sales tax on food does not apply to
prepared foods found in delis and
restaurants. |
The McKenzie Banner
