Press Releases

Inheritance Tax Phase-out Signed by Haslam

Press release from the Office of Tennessee Gov. Bill Haslam; June 6, 2012:

HUMBOLDT – Tennessee Gov. Bill Haslam today traveled to Luckey Family Farm in Humboldt to highlight the second of three tax cuts passed during this year’s legislative session and signed by the governor.

Haslam held a ceremonial bill signing of HB 3760/SB 3762, which phases out the state inheritance tax during the next three years before it is completely eliminated starting January 1, 2016.

The bill was introduced by the governor as the state continues its work toward providing the best customer service at the lowest possible cost to Tennesseans.

“We’re focused on making state government more efficient and more effective while reducing the cost to taxpayers,” Haslam said. “Jobs are created when people invest capital. The inheritance tax is causing Tennesseans to take their capital to other states as they grow older, but businesses and family farms can’t pick up and leave. Eliminating this tax will ease the burden on family businesses and farms that are left to other generations.”

The exemption level will be lifted to $1.25 million in 2013; $2 million in 2014; and $5 million in 2015.

Haslam included $14.2 million in the FY 2012-2013 state budget to fund the legislation.

In Whitwell Monday, the governor signed HB 3761/SB 3763, legislation reducing the state portion of the sales tax on groceries from 5.5 percent to 5.25 percent. His plan is to reduce it next year to 5.0 percent.

Press Releases

Ramsey Touts Accomplishments Under Republican-Controlled State Government

Statement by Lt. Gov. Ron Ramsey; May 18, 2012:

Dear Friend,

Earlier this month, the 107th General Assembly concluded its business.

My goals for this legislature were the same ones I had when first elected: give the people of Tennessee what they have asked for: more jobs, less spending and smaller government.

Now, with partners like Governor Bill Haslam and Speaker Beth Harwell, we have truly been moving the conservative ball forward. I have often said that it matters who governs. Over the past two years, we have proved why.

In our first year of unified Republican government, we put conservative principles into action by instituting landmark education reform, tax cuts and smaller government.

This year we again heeded the call of voters to make government smaller, more efficient and customer friendly. These are things I have championed throughout my career in the legislature.  But now, with a Republican Governor and Speaker of the House, we have become a transformational force for good government in Tennessee.

Representing the People

This General Assembly worked diligently and efficiently to get our work done on time – adjourning earlier than at any point in the last 14 years and using the least amount of legislative days since 1984.

This achievement not only saves considerable taxpayer dollars it restores the great virtues of our citizen legislature. To those who have only observed Tennessee politics for the last few decades it might appear the legislature got out “early” by adjourning in early May. This is a common misconception I intend to erase. We got out on time. Period.

Tennessee does not have a full-time legislature and, if I have anything to do with it, we never will. By allowing session to drag on into June or July year after year our Democrat predecessors succeeded only in creating more government and allowing the people’s representatives to get farther and farther away from their constituents. It is almost impossible to represent people with whom you are only tangentially connected or a community in which you only nominally reside.

Legislators should do the business the people ask of them in Nashville – and get back home. The cause of small, efficient and responsive government requires it.

Shrinking government and cutting taxes

This year, the state of Tennessee is budgeted to spend $31.1 billion – nearly $1 billion less than our current operating budget. These are real cuts, not the phantom cuts of Washington where removing anticipated increases in spending counts as a cut.

Tennessee budgeted conservatively this year. We worked with revenue that we actually had rather than “projected” revenue we “expected” to have. We balanced this budget much like you and your family balance your own. Unified Republican government did away with the gimmicky accounting of the past and relied on tangible revenue numbers.

Not only did we shrink government, we returned money to the taxpayers. We gave every Tennessean tax relief by again reducing the food tax – reductions previous Democrat regimes refused to make.

We also set a course for the ultimate elimination of the death tax – a tax that punishes small farmers and businessmen seeking to provide for the next generation.

Tennessee plunged a stake into the heart of this insidious tax that attacks the very essence of the American Dream. Unlike Washington, Tennessee plans for the future and encourages those in our citizenry to do likewise. I am proud that this General Assembly was the one that finally brought the death tax before the reaper.

Coupled with the elimination of the gift tax, this General Assembly cut taxes by more than $50 million this year, resulting in the release of capital and the creation of jobs.

Tennessee Republicans used to be limited in what we could do. Operating under a Democrat Governor and House Speaker, my office had to play defense against Big Government Democrats leaving across the board conservative governance as merely a dream for some future place and time. That place is here and that time is now.

Now, we have the numbers to enact our conservative principles. And with your help we will enlarge our majority so that no one stands in the way of true conservative government ever again.

Reforming State Government

One of our most transformative legislative achievements this session was the passage of Gov. Haslam’s TEAM Act. A revolutionary step in state government, the TEAM Act will help us attract, retain and promote the best applicants and employees in state government. Excellence will now be rewarded when it is achieved, just as it is in the private sector.

This year also marked the passage of our major unemployment insurance reform. Republicans heard the clamor and saw the need for legislation that results in job creation and we filled the void.

The Unemployment Accountability Act of 2012 strengthens the definition of employee misconduct to ensure that those who have been fired for cause no longer receive benefits. We instituted new work search requirements for unemployment beneficiaries, encouraging the use of existing state infrastructure to help return the unemployed to the job market.

Nothing cures both economic and social ills like a good job. Having a job doesn’t just fulfill a man or woman’s economic need but their spiritual need as well. It bestows upon them a sense of self-worth which permeates all aspects of life.

This reform will be a boon not only for job creators by protecting them from fraud and abuse – it also aids job seekers by pushing them towards the job market.

Another important piece of the Republican job creation package was our “loser pays” tort reform. Businesses don’t mind taking risks but they have to be calculated ones. “Loser pays” will free employers from the time and cash consuming drudgery of frivolous lawsuits and allow them to do what they do best: employ people.

The fight against addiction

This General Assembly has also taken on crime passing bills attacking domestic violence, criminal gangs and drugs.

Most important to me is the fight against synthetic drugs, which have become an epidemic in Northeast Tennessee. Many lives have been lost due to this scourge and I was proud to be part of the team fashioning a solution. Bills passed in this General Assembly banned chemical compounds used in illegal synthetic drugs, no matter how criminal chemists continue to modify them  Our new measure will keep the law ahead of the drug pushers.

We also began a program to drug test those receiving government assistance.  This will end the taxpayer subsidy of illegal drugs. We as a society are never going to prevent every motivated user from consuming drugs – but we certainly don’t have to pay for it.

This is why we constructed a constitutionally sound bill that will allow us to remove drug users from the welfare rolls while offering them help. This protects taxpayers and attacks addiction. It is a win-win for Tennessee.

Protecting citizenship

While we continue to implement our new Photo ID law protecting citizenship at the ballot box, we have taken further steps to protect the rights of citizens.

While I’m a conservative who believes in personal responsibly and limited government, we as a society do need to provide some sort of safety net.  However, that net must be for citizens only. That is why I aided passage this session of the Eligibility Verification Act.  It ensures that only those in the United States legally receive any taxpayer-funded benefit.

Again, this is common sense but it was left undone by our Democrat predecessors.

Tax cuts, smaller government and job creation – this is conservative government in action. It is what Tennesseans asked for and it is what Tennessee shall get as long as you allow me to serve as Lt. Governor.

I humbly appreciate the support of all Tennesseans as the legislature continues to work hard to make Tennessee the best state in the nation in which to live, work and raise a family.


Ronald L. Ramsey

Lieutenant Governor

Speaker of the Senate


Press Releases

Ramsey: ‘Death Tax’ Will Soon Meet the Reaper

Statement from Lt. Gov. Ron Ramsey, April 27, 2012: 

Lt. Governor Ramsey Made the Following Statement Following Senate Passage of HB3760:

“The American Dream — working hard to provide for your family — is not a dream that ends in death. Taxing those who have worked their whole lives to build and sustain a small farm or business in order to pass it on to the next generation is not just carrying out bad policy — it is acting in bad faith. By passing this bill today on the Senate floor, we have ushered this immoral, unfair tax up to Death’s door. When Bill Haslam adds his signature, the death tax in Tennessee will have met the reaper. I applaud the Governor, Speaker Harwell and all who have worked hard to make this possible. This is a good day for Tennessee.”


Business and Economy News Tax and Budget

Tax Cuts Passed By State House

Tennesseans are only a few votes away from paying slightly less on their groceries and, for some, the tax they pay to inherit wealthy estates.

The House of Representatives on Thursday gave an overwhelming thumbs-up on two proposals that would reduce taxes in the next year. One would drop the tax on non-restaurant food, and the other would repeal the tax people pay when they are bequeathed an estate worth more than $1 million.

“We looked at the numbers, rolled our sleeves up, and worked with Governor Haslam to come up with two bills that will really benefit all Tennesseans,” said Finance Chairman Charles Sargent, R-Franklin, in a statement.

The two measures now head to the Senate for final approval. Gov. Bill Haslam, who pitched both tax cuts back in January, is expected to sign the bills into law if they make it to his desk.

Which is very likely, according to legislative leaders on both sides of the aisle, who said they like the idea of giving taxpayers money back then the state collects more than it needs.

The only catch, according to House Democratic Caucus Leader Mike Turner, is the state needs to spread those tax cuts out among more people.

Turner, D-Old Hickory, voted against the bill that would repeal the tax on inheritances by 2016, saying he wanted to see that plan scaled back in favor of a meatier cut of the food tax.

“I’m not opposed to cutting the inheritance tax. But I think our priorities should have been, let’s give the relief to people on the lower end first, because we’re putting a huge burden on them,” he told reporters.

The first step in repealing the inheritance tax begins with raising the exemption for estates to owe taxes on. Under the bill, HB3760, the state would raise the exemption to $1.25 million from $1 million. By 2016, the phasing out of the tax will have saved money for heirs to more than 800 estates, according to legislative number crunchers.

The plan to reduce the food tax, HB3761, would equate to a savings of 25 cents for every $100 spent on groceries. For a family of four on a modest food budget of $884 a year, that means $26.52 in savings a year.

“The bottom line is we rely on the sales tax for a steady source of revenue for this state,” House Speaker Beth Harwell said to reporters Thursday. “On the other hand, when you remove the food tax, you don’t encourage investment in this state whereas the elimination of the death tax, I believe, will end up bringing additional revenue into the state.”

Justin Owen, CEO of a free-market think-tank called The Beacon Center of Tennessee, says phasing out the inheritance tax is “possibly the most important legislation proposed in the General Assembly this year.”

“The repeal will alleviate the farmers and small business owners who are harmed by this tax, bring additional job opportunities to our citizens, and actually lead to an increase in tax revenue over time,” he said in a statement.

The two tax cuts are up in the Senate Finance Committee Tuesday, April 17.

Business and Economy Featured News Tax and Budget Transparency and Elections

Tax Cut Proposals Aplenty

Expect a tax cut, Tennessee’s high-ranking lawmakers are telling the public. In fact, expect as many as four.

Capitol Hill leaders are all but promising that Tennesseans should expect to pay less taxes on everything from their groceries to inherited multimillion-dollar estates.

“The important thing is we are sticking to the basic philosophy of our party, which is when additional revenue comes into the state, we look for ways to return it to the taxpayers instead of spending it,” said House Speaker Harwell, R-Nashville.

In past years under Gov. Phil Bredesen, a Democrat, lawmakers had considered raising taxes, such as by removing the local sales tax cap on high-priced items like boats and furs. With the GOP taking control of both chambers and the governor’s office last year, the Legislature reversed course and cut taxes by giving seniors a tax break on income from investments.

“It’s absolutely the right thing to do,” said Ben Cunningham, spokesman for Tennessee Tax Revolt, a fiscally conservative public advocacy group, and a persistent critic of heavy taxpayer burdens.

“During the good times, which is what it looks like we’re entering into now, we’re reducing taxes and expanding our economy and expanding our tax base in the future. And that’s the way to go,” he said.

In recovering from the recession that began in 2008, state revenues are now up 4.8 percent compared to a year ago, giving state officials the flexibility to decide how — or if — they’ll spend that unexpected taxpayer money. But Dick Williams of the left-leaning Tennesseans for Fair Taxation says the state should avoid rushing to reduce taxes without finding a way to offset the revenue, calling this year’s tax reform “low-hanging fruit for winning elections.”

“The whole concept of just lower taxes as low as you can ignores the fact we all rely on … roads and schools and services government provides,” said Williams, TFT chairman and an advocate for reducing the food tax in exchange for a broad-based income tax. “We just think it’s bad policy and shouldn’t be used as just a popular re-election or election tool.”

The proposed cuts enjoy varying levels of support from the two political camps and would touch all sorts of Tennesseans. Plans range from wiping away the tax on gifts like hand-me-down family cars or multimillion-dollar inheritances, reducing costs at the grocery store and giving seniors a break on taxes from earnings on stocks and bonds.

Tennessee Democrats say they’re generally in favor of cutting taxes, too, but would rather spread any tax breaks out to a larger audience by reducing the sales tax on food — even if the savings would appear small.

“As far as having an effect on people, it doesn’t have near the effect that a reduction in the sales tax on food would have, for instance,” said leading House Democrat Craig Fitzhugh, of Ripley.

Here are the four major tax cuts lawmakers are considering this year and a breakdown of how much taxpayers are currently dishing out to pay them:

“Inheritance Tax” SB3762/HB3760

This tax kicks in only when someone inherits wealth or a property worth more than $1 million. Any dollar over the $1 million threshold is taxed at progressive rates from 5.5 percent to 9.5 percent. Gov. Bill Haslam wants to gradually raise the exemption to $1.25 million beginning next year.

For example, coming into a property worth $1.04 million costs $2,200 in taxes. However, being left a property worth $5 million would cost $368,400 to inherit. Under Haslam’s plan, the $1.04 million property could be passed down tax-free next year, and the $5 million property would cost $344,650 in taxes.

Haslam and Republican lawmakers want to phase out this so-called “death tax” over the next four years, saying it hampers farm and business owners and forces some to relocate so their heirs can avoid paying the tax when they die. Democrats agree with deleting the tax in principle but say they’d rather see the state take a bigger bite out of the tax on food.

Inheritance Tax Stats:

  • In fiscal year 2011, people paid $97,875,967 in inheritance taxes.
  • In 2010, people paid: $75,887,698 in inheritance taxes.
  • That’s a 28.9% increase in the last year.
  • Reducing the tax next year will mean $14.1 million less for state government.

“Grocery Tax” SB3763/HB3761

While most other products in Tennessee carry a 7 percent state tax, non-restaurant food is taxed at 5.5 percent. The tax doesn’t apply to all groceries, like diapers or garbage bags, but only food products like meat, vegetables and bread.

Haslam wants to reduce the tax to 5.3 percent in hopes to drop it to 5 percent in three years. However, there is so far no legislation that would require the state to follow the governor’s timeline.

A family of four buying $884 a month in groceries would save $21.22 in the first year under Haslam’s proposal. Dropping the tax to 5 percent would mean that family would save $53.04 annually, and eliminating it completely would translate to $583.44 in savings a year.

Both parties are on board with this tax cut, although Democrats and some Republicans want to take a larger slice out of the tax. Some want to drop it to 5 percent next year and others want to get rid of it all together.

Food Tax Stats:

  • In fiscal year 2011, people paid $489,939,858 in taxes on non-restaurant food.
  • In 2010, people paid $476,875,314 in taxes on non-restaurant food.
  • That’s a 2.7 percent increase in the last year.
  • Reducing the tax next year to 5.3 percent would mean $17.1 million less for state government to spend.

“Gift Tax,” SB2777/HB2840

This is the newest tax cut on the block this session. This bill would repeal the state’s current 5.5 percent to 16 percent tax on gifts to individuals, like cars, boats and real estate.

The tax rate and an exemption depend on the value of the gift and who it’s given to.

For example, a father can give his daughter his old Volkswagon, and she won’t have to pay the gift tax on it unless it’s worth more than $13,000. If it is worth, say $20,000, she’d have to pay $385 in taxes. If the father gave a car to his friend’s unrelated goddaughter and it’s worth more than $3,000, she’d get stuck paying the tax. That same $20,000 car would cost her $1,105 in taxes.

Harwell added this repeal to the list of priority tax cuts earlier this month, saying it would round out the types of taxes the state should no longer impose. The governor said lawmakers have approached him about doing away with this tax, and he’s working to see whether the state can afford it.

“Gift Tax” Stats:

  • In fiscal year 2011, people paid $15,472,738 in gift taxes.
  • In 2010, people paid $11,448,443 in gift taxes.
  • That’s a 35.2 percent increase in the last year.
  • Reducing the tax next year would mean $14.9 million less for state government.

“Hall Tax,” SB2535/B3423 and SB2536/HB2972

Named after its creator Sen. Frank Hall, who pushed the bill in the late 1920s, this tax focuses on income from interest on bonds and notes and dividends from stock. That interest is taxed at 6 percent, but lower income people over 65 are exempt.

For 2011 income and the tax filing coming up next month, individuals over 65 with total income less than $16,200 and couples making less than $27,000 last year are exempt.

For 2012, the senior citizen exemptions are higher, at $26,200 for individuals or $37,000 for couples.

Lt. Gov. Ron Ramsey was behind the expanded exemption and says he wants to go further this year, although Harwell and Haslam aren’t so sure. The governor said he’s still trying to figure out what the state can afford to do.

Ramsey wants to either up the exemption by $1,000 for both single filers and couples or require that the exemption keep pace with the rate of inflation.

“Hall Tax” Stats:

  • In fiscal year 2011, people paid $189,518,032 in Hall taxes.
  • In 2010, people paid 172,459,343 in Hall taxes.
  • That’s a 9.9 percent increase in the last year.
  • Increasing the exemption by $1,000 under SB2536 would mean $88 million less in state government.
  • Increasing the exemption to keep up with inflation under SB2536 would mean $1 million less in state government.
Environment and Natural Resources News NewsTracker Tax and Budget

State Gift-Tax Cut Weighed Against Other Requests

Gov. Bill Haslam says he’s considering the idea of cutting or eliminating the tax on large gifts, which has “been brought up by several legislators.” But the governor said he won’t know until April whether the state can afford it.

Knocking down the gift tax is the newest addition to a handful of tax cuts Republican leaders say they want to see this year.

“We’ve heard a lot of folks saying they would like that addressed,” Haslam told reporters after speaking to the Nashville  Area Chamber of Commerce in downtown Nashville Tuesday.

“We have a whole lot of requests for budget amendments. Way, way more than we can ever fund, and so we’re trying to wade through that and prioritize amongst a lot of different areas of interest,” he said.

People now pay a 5.5 percent to 16 percent state tax on pricey gifts such as a car, land or wealth.

The tax applies for gifts worth $13,000 within the family or gifts of more than $3,000 to others.

Last budget year, the state collected more than $296,000 in gift taxes, a 9 percent increase over the year before, according to the Department of Revenue.

Eliminating the gift tax is as important as the governor’s preferred tax cuts on food and inheritances, said House Speaker Beth Harwell.

Senate Speaker Ron Ramsey says he’ll back a reduction in the gift tax, but he’s also pushing for a reduction in the tax on income from stocks and dividends although Harwell and Haslam say that tax is not among their priorities.

“We actually don’t have anything on the Hall this year,” Haslam said. “We did last year. There’s nothing on the Hall this year.”

Business and Economy Featured News Tax and Budget

Another Round of ‘Hall Tax’ Reductions Unlikely This Year, says House Speaker Harwell

The Tennessee Legislature won’t pass much in the way of tax cuts beyond what Gov. Bill Haslam is requesting for 2012, says House Speaker Beth Harwell.

That means a reduction in the Hall tax on income from stocks and dividends — a tax Lt. Gov. Ron Ramsey wants to see slashed this session — isn’t likely in the cards, she said.

“I do not think so this year,” Harwell said Thursday when asked if the Hall tax will make it to a floor vote. “We did, of course, take a bite out of that last year. But I think our focus now is going to be on the reduction of the death tax, elimination of the gift tax and a reduction of the food tax.”

Lawmakers have yet to take up a bundle of bills reducing taxes on Tennesseans as lawmakers push those measures toward the end of the spring legislative session, likely after lawmakers have a clearer picture of the state’s budget.

Although reducing the Hall tax on interest and dividends isn’t in the Haslam-Harwell playbook this year, it’s still a priority to Ramsey, according to the lieutenant governor’s spokesman, Adam Kleinheider.

The tax currently charges 6 percent on income from interest on bonds and notes and dividends from stock, although people over 65 with total income less than $16,200 or a couple with less than $27,000 are exempt. Last year, lawmakers upped the exemption to $26,200 for individuals and $37,000 for couples, which will kick in for the 2012 tax year.

One of Haslam’s prime objectives this year is to reduce the food tax from 5.5 percent to 5.3 percent. The move is part of a larger plan to drop the tax on non-restaurant food to 5 percent over three years.

He also wants to increase the exemption on the inheritances tax, otherwise known as the “death tax.” His plan is to raise the exemption from $1 million to $1.25 million to lower the tax burden on family business owners in hopes of eventually raising the exemption to $5 million.

Lawmakers from both parties have signaled they’d like to go further than Haslam by reducing the food tax and inheritance tax even more or completely eliminating them.

Another tax-cut idea that’s been suggested is to do away with the “Gift Tax,” which charges 5.5 percent to 16 percent tax on transfers of wealth or property amounting to more than $13,000 to family members and $3,000 to non-family. Harwell said the GOP plan is to eliminate that tax.

Business and Economy News Tax and Budget

GOP Leaders Eating Their Words? Now Say They’ll Support Food-Tax Cut

State lawmakers have yet to pick through Gov. Bill Haslam’s list of priorities going into the legislative session, but so far many favor his plan to ever-so-slightly cut the food tax.

That group of fans includes Republicans who not so long ago scoffed at the idea of taxing groceries at a lower rate.

“I think it’s great. It’s a way for all Tennesseans to be able to participate in a tax cut,” said Rep. Gerald McCormick, the House Republican Leader. Back in August, when Democrats proposed using higher-than-expected sales tax revenues to offset a grocery-tax cut, McCormick labeled the idea “irresponsible.”

But McCormick stood by his earlier assessment Wednesday, telling TNReport he still believes the Democrats’ tax-cut proposal over the summer was a “political ploy.”

“I thought it was irresponsible, considering that we were mired in a recession, in a deep recession. The economy is recovering now, and I think that’s reflected in our sales tax numbers. So it’s become a possibility, whereas six months ago I think it was simply political posturing on the part of the Democrats,” said McCormick.

Lt. Gov. Ron Ramsey belittled talk about reducing the food tax as recently as last month, telling reporters cutting the food tax is “more psychological than it is anything else.”

“We’re never going to do away with (the food tax) completely. So I don’t think that lowering it really does help that much, and I think we can concentrate more on the tax that we can actually eliminate,” Ramsey, R-Blountville, continued. He has since said he’ll back the governor’s tax plan.

House Speaker Beth Harwell, too, showed little interest in touching the food tax three weeks ago, saying, “we don’t have the revenues available to do it.”

The governor’s plan would mean about $18 million less that the government sponges up in revenue from the private sector. Haslam’s plan would reduce the grocery tax by 20 cents for every $100 spent on food. That would save a family of four on a modest grocery budget $21.24 a year.

Despite the scant savings taxpayers would see, Democrats said they’re pleased the governor has made cutting the grocery tax an acceptable topic of conversation among the Tennessee General Assembly’s Republican majority.

“Well, it’s obviously probably not enough,” said House Democratic Caucus Chairman Mike Turner about the tax cut. “Anytime we get the opportunity to lower the sales tax I’m for it, even with the incremental steps it’s not going to be a real noticeable impact. … Hopefully one day we’ll get a full percentage point knocked off.”

Lawmakers reduced the tax back in 2007 by a half cent to 5.5 cents on the dollar. Sales tax on non-food items is 7 percent.

Democrats pushed last summer for legislative leaders to consider cutting the food tax even further, although GOP leaders at the time dismissed the idea, saying the state revenues had to recover first. But Haslam said Tuesday he’s making it a goal to reduce the food tax from 5.5 percent to 5.3 percent this year with plans to reduce it to 5 percent in three years.

Senate Majority Leader Mark Norris, Ramsey’s right-hand man in the upper chamber, says he, too, is content with the governor’s proposed plan to cut the food tax.

“It’s a great start. I mean I think some of us wish we could do more more quickly. And maybe through the budget hearings we’ll find that there is a little bit of flexibility. Perhaps we can do more. But it’s a great place to start.”

The governor’s plan is do-able, says the Republican chairman of the powerful House Finance Committee.

“This year, I think the funds will be available, so I don’t see a problem in this year’s budget. I’m not saying we don’t have to make some other cuts, but funding will be available with the increase in revenue that we have,” said Chairman Charles Sargent, R-Franklin.

The governor’s legislative priorities also include broadening the exemption from the inheritance tax from $1 million to $1.25 million, which would benefit an average of 200 people a year, a plan House Democratic Leader Craig Fitzhugh said he can support if the state can spare the funds.

“It doesn’t have the broad effect that the sales tax on food does, but it would be something that if we can afford it, it would be an appropriate thing to look at,” said Fitzhugh, D-Ripley.

Featured News Tax and Budget

Ramsey: Food-Tax Cut Off the Table

Lt. Gov. Ron Ramsey is slamming the door on the possibility of cutting the grocery tax, saying most people wouldn’t notice if it was lower, anyway.

“I’ll bet you that if you poll the citizenry, there isn’t 5 percent that can tell you that when you walk into a grocery store and you buy some pork and beans, your tax is 5.5 percent from the state, and if you reach right beside it and get a box of toilet paper, it’s 7 percent,” Ramsey told reporters Thursday.

“I think it’s more psychological than it is anything else,” he said.

Sales taxes, including on the purchase of food, are the bread and butter that fuels state and local government spending, Ramsey said. Combined with local sales taxes, food is taxed as much as 8.25 percent while other goods are taxed at a rate up to 9.75 percent.

Lowering the food tax might end up starving government of necessary revenue nourishment, Ramsey said.

“We’re never going to do away with (the food tax) completely. So I don’t think that lowering it really does help that much, and I think we can concentrate more on the tax that we can actually eliminate,” he continued.

Asked by a reporter if he used to be a supporter of cutting the sales tax on food, Ramsey said, “Actually, I wasn’t a big proponent, to be perfectly honest.” However, as recently as July, Ramsey said, “I’d love to eliminate the food tax and I hope and pray that Tennessee will soon be in a position to do just that.”

At present, Ramsey is setting his sights on cutting the 6 percent Hall tax on income from interest and dividends while House Speaker Beth Harwell is looking to cut the inheritance tax, which kicks in on estates worth more than $1 million.

House Democratic Caucus Leader Mike Turner announced Friday he wants to repeal the Hall tax altogether.

“The Republican majority has said they want to cut taxes and I think they should support this legislation and also produce a balanced budget,” said Turner. “I am calling upon all my colleagues in the House Republican Caucus to sign on to this bill.”

Gov. Bill Haslam has said he’d like to lower all three of those taxes, but says next year is probably not the time.

Democrats are pushing for a reduction in the food tax, but Republicans have pushed back, calling the proposal irresponsible political posturing.