The governor’s proposed reduction to the food tax is laudable, but Democratic lawmakers believe it doesn’t go far enough.
During the Democratic response to Gov. Bill Haslam’s State of the State address, Sen. Lowe Finney, D-Jackson, said that they applaud Haslam’s proposed reduction from 5.5 percent to 5 percent over a few years, but said that they would like to see a gradual elimination of the food tax.
“This would indeed help all Tennesseans,” Finney said. “This would help everybody around the state. And I think especially if you go in and you look at low-income areas, you look at rural areas around the state, you would see that this legislation could have a really positive impact.”
The gradual elimination of the grocery tax has support from Democratic leaders in both chambers of the General Assembly.
“We’re actually glad that the governor’s doing this,” said Rep. Mike Turner, D-Old Hickory. “But we’ve already had bills filed. We’ve got several different bills filed from last year that we’re carrying forward.”
One sponsored by Turner aims to cut the sales tax from 5.5 percent to 5 percent in the first year and to 4.5 percent in the second year.
“We’re a very sales tax-dependent state, so it’s hard for us to cut sales tax, but it’s a step in the right direction,” Turner said. Sales taxes make up about 54 percent of Tennessee’s state tax revenue.
Turner also suggested that instead of making the cuts the governor has proposed to the inheritance tax and the Hall income tax on investments, which he says will only benefit the wealthy, that the Legislature take that money and apply it to steeper cuts to the grocery tax to benefit everyone.
Turner’s bill, HB1529, originally scheduled to be debated in the House Finance Subcommittee Wednesday, was deferred to be debated alongside other sales tax legislation, including Haslam’s bill. Turner said that he expects it to be taken back up within the next few weeks.
In addition to the governor’s bill and his own bill, Turner said that Rep. Jimmy Naifeh, D-Covington, had several amendments to attach to Turner’s bill that would make steeper cuts to the grocery tax.
Turner and Naifeh would need political support from their colleagues in the GOP — who control both chambers of the Legislature and the executive branch — for their proposals to have any chance of passage.
Tennesseans for Fair Taxation, one of the state’s most vocal opponents of taxing food purchases, in fact does not support Haslam’s grocery tax reduction, or any other tax cut that isn’t offset by an increase in revenues somewhere else.
“We’re all about removing the tax on groceries, but we also want to make sure there is still adequate funding for public services,” TFT executive director Elizabeth Wright told TNReport. “We feel that Tennessee has a budget crisis, and we can’t really afford to lose any more income coming in because people are losing jobs, services are being cut and the quality of our public services is declining even further than it has been.”
Craig Fitzhugh, the House Democratic leader, says that in fact because revenue estimates were lower than what the state has actually collected, the proposed grocery tax cut is essentially revenue neutral.
“We have the revenue to do this, because the revenue has increased since revenue estimates were made,” Fitzhugh said. “I think the governor recognized that, and we’re glad that he did — and I’m glad see him support our measure that we came forth with.”
Bill Howell, TFT’s Middle Tennessee director, doesn’t buy Fitzhugh’s reasoning. Cutting any of the state’s taxes without finding ways to bump tax collections up in other places will “result in a steady ratcheting down of the state’s revenues,” Howell said.