Lawmakers Hunger for Larger Grocery Tax Cut

Gov. Bill Haslam’s proposal to cut Tennessee’s sales tax on food by a half percentage point over three years has been joined by several other proposals from Republican and Democratic legislators alike.

The volume of bills related to the tax has prompted lawmakers to move all of the proposals to a special meeting of the House General Subcommittee of Finance, Ways and Means, toward the end of the session, after the committee approves the budget, said Rep. Curtis Johnson, R-Clarksville, vice chair of the sub-committee.

“I think that’s wise, what the chairman of the finance subcommittee did,” said Rep. Glen Casada, R-Franklin, “because what it says is ‘Gentlemen, you’ve got until late April to figure out where to come up with those things you want to do,’ and, in other words, don’t just come to us and say, ‘I want to cut the sales tax on food,’ and then complain, when that’s all you bring, is an idea, and you don’t propose a way to do it.”

One such bill, HB2239, sponsored by Casada, proposes to cut the sales tax on food from 5.5 percent to 5 percent and would take effect July 1 of this year. A family of four spending $884 on groceries per month would save about $53 a year under Casada’s plan. Tennesseans would pay about $46 million less in grocery taxes annually, and Capitol researchers estimate they would spend some of that money on other items subject to sales tax.

The net effect would be a $42 million loss to state coffers.

Casada has requested the bill be moved to the special tax committee in order to find a way to offset the decrease in revenue to the state.

“That’s why I put the bill on notice and put it behind the budget,” Casada said. “That way it becomes public. Everyone knows what’s going on and knows exactly what I’m trying to do, and I’m looking for other legislators to help me find areas they may know about, where we could find this $42 million.”

Haslam’s proposal to cut the sales tax follows eight months of tax revenues increasing by 5 percent or higher. Republican lawmakers, who recommended against cutting the sales tax several months ago, have said the uptick in revenues has given them a reason to support the proposal.

While Democratic lawmakers have put forward bills that would make steeper cuts to the tax, they have said they view the proposal positively. Lt. Gov. Ron Ramsey, R-Blountville, has said that although he doesn’t view a reduction to the sales tax as a priority, the gradual reduction proposed in the governor’s plan is prudent.