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Dems push food tax cut

April 6th, 2007 12:00 am by Hank Hayes



Democrats recognize "political reality" by advocating their own version of legislation to reduce Tennessee's sales tax on food items, Lt. Gov. Ron Ramsey said Thursday.


"We may want more (off the sales tax on food) than they want," Ramsey, R-Blountville, said of the difference between Senate Republican and House Democratic legislative proposals being considered by lawmakers.


After Gov. Phil Bredesen indicated he may compromise with the Republican-controlled Senate and favor a sales tax cut on food in exchange for support on his proposed 40 cent cigarette tax hike for education funding, Democrats moved a bill forward to cut the 6 percent sales tax on bread and "essential food items."


Those items include infant formula, breakfast juice, breakfast cereals "high in folic acid," peanut butter, milk, dried peas and beans, carrots, canned tuna, certain cheeses and simple eggs. The legislation says the food items are associated with the so-called "WIC" - women, infants and children - special supplemental nutritional program.


The bill, sponsored by House Majority Leader Gary Odom of Nashville, would also authorize local governments to amend or repeal ordinances adopting a local-option sales tax on the retail sale of bread and essential food items.


On Wednesday, the budget subcommittee of the House Finance Committee placed Odom's bill "behind the budget" to be acted on after lawmakers complete hearings on the state's spending plan.


One Republican-backed measure calls for reducing the state sales tax on food incrementally but maintains the local-option sales tax on food.


Bredesen's administration has projected that a half-cent cut in the sales tax on food would cause an approximate $40 million loss of revenue in the next fiscal year. The state's sales tax base on food grows about 2.5 percent a year and should be worth more than $8 billion by 2008, according to the Department of Revenue.


Ramsey reiterated that any details of a cigarette tax hike/food tax cut should become clearer in early May when the state funding board meets to evaluate state revenue projections.


Competition between the two policy measures intensified this week when a statewide poll showed that a majority of Tennesseans support Bredesen's so-called "Schools First" plan to help fund education by raising the cigarette tax from 20 cents to 60 cents per pack.


The phone survey of Tennessee voters, conducted March 26-28 by Garin-Hart-Yang Research Group of Washington, D.C., found 70 percent of Tennesseans support Bredesen's proposal to generate more than $200 million a year in additional revenue for K-12 and higher education by raising the cigarette tax. Of those, 49 percent strongly favored the governor's plan and 21 percent somewhat favored it. Meanwhile, 17 percent strongly opposed the measure and 11 percent somewhat opposed it.


Tennesseans for Fair Taxation (TFT), a statewide coalition that once advocated a state income tax, suggested public pressure to cut sales taxes on food also is growing.


TFT said 35 states do not tax groceries. Arkansas voted earlier this year to cut its food tax in half beginning July 1, and debates are taking place in both Mississippi and Alabama to eliminate food taxes entirely. Kentucky already fully exempts food from taxation, according to TFT.


Tennessee currently has the highest state and local food tax in the nation with an average rate of 8.35 percent, according to TFT.


TFT seems to think Republicans and Democrats will eventually find common ground on a food tax decrease.


"The great news for Tennesseans is that consensus is building across party lines that the time for a cut in Tennessee's high food tax is upon us," TFT Board Chair Dave McIlwaine said in an e-mailed release. "This emerging consensus goes to prove that putting food on the family table is not a partisan issue. It's a human rights issue. It's a family issue. The real question now is, what will the food tax cut look like?"


For more information go to www.legislature.state.tn.us/ and click on "Legislation." Odom's bill is HB 1260.


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