Advocacy group calls for sales tax cut on food

Hank Hayes • Apr 3, 2008 at 12:00 AM

BLOUNTVILLE — The Tennessee advocacy group that wanted a state income tax in 2002 launched a campaign Thursday for a 1 percent sales tax reduction on food to be paid for by closing corporate tax loopholes on large multi-state companies.

Knoxville-based Tennesseans for Fair Taxation (TFT) insisted consumers as well as small businesses will like the campaign.

“Slowly but surely we’re trying to whittle down the food tax as a matter of fairness ... and we’re proposing a way to pay for those reductions,” said TFT regional organizer Kimberly Douglas during a Tri-Cities Regional Airport news conference to kick off the campaign.

But a number of bills seeking sales tax reductions on food have been filed on Capitol Hill, and all of them are expected to face difficulty because of state government’s tenuous financial situation.

Year-to-date revenue collections for the first seven months of state government’s current fiscal year were $203 million less than the budgeted estimate. The decrease of state sales tax revenue resulting from last year’s 0.05 percent sales tax reduction on food is estimated to be more than $45 million, according to the Office of Fiscal Review.

The legislation TFT touted at its news conference actually calls for a 2 percent reduction on the state sales tax on food from 5.5 percent to 3.5 percent — a bill projected to have a $153.5 million negative impact on state revenues. The bill is sponsored by state Sen. Tim Burchett, R-Knoxville, and state Rep. Craig Fitzhugh, D-Ripley.

TFT said the bill will work because multi-state companies operating in Tennessee would be required to combine reporting for franchise and excise tax purposes.

The Tennessee Department of Revenue suggested the move could bring in an extra $20 million per year.

“Closing these loopholes is a matter of fairness,” Douglas said. “It’s a matter of standing up for the thousands of small businesses who make our state’s economy strong.”

Tennessee has the third highest state and local food tax in the country, even after last year’s reduction, said TFT board member Greg Williams.

“When you add it all up, the food tax amounts to 28 days’ worth of groceries each year,” he said.

However, a 1 percent sales tax reduction on food would help families save less than $20 a month on groceries, according to TFT.

For more about TFT’s campaign go to www.fairtaxation.org/foodbiz/ or to www.youtube.com/taxfairness.

TFT is also organizing workshops across the state. Those interested in scheduling a workshop can call (888) 671-5188.

For more about the legislation go to www.legislature.state.tn.us and click on “Legislation.” The bill’s number is HB 3182. It is scheduled to be considered by a Senate subcommittee on Tuesday.

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