NASHVILLE, Tenn. (AP) — The state House has unanimously approved Gov. Bill Haslam’s proposal to cut the state’s sales tax on groceries.
If approved by the Senate, the state’s tax on groceries would drop by a quarter percentage point to 5 percent. Lawmakers last year enacted a cut of the same amount.
The state’s sales tax on non-food items is 7 percent.
The tax reduction is projected to cost the state about $23 million in state revenue — or an average annual tax savings of about $3.56 for each Tennessean.
The companion bill is awaiting a vote in the Senate Finance Committee but is not expected to find much opposition.
The Senate passed and sent to Gov. Bill Haslam Friday legislation abolishing Tennessee’s inheritance tax and lowering the sales tax on groceries.
Legislative leaders, meanwhile, said they will also back passage of a third bill that would repeal the state’s gift tax. Haslam has said he supports that move as well.
The bill providing a phased-in elimination of the inheritance tax, HB3760, passed the Senate 32-1. The House had approved earlier, 88-8.
As approved, the bill calls for raising the current exemption for the inheritance tax from $1 million to $1.25 million this year and increase the exemption annually until 2016, when the tax would be eliminated entirely.
The sole no vote in the Senate came from Sen. Roy Herron, D-Dresden, who had attempted to amend the bill to block the final step, leaving the exemption at the scheduled $5 million level for estates of those dying in 2015.
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News release from House Republican Caucus:
NASHVILLE, Tenn.–The pocketbooks of all Tennesseans are getting help from the Legislature with the passage of two major tax cuts.
The House of Representatives today overwhelmingly approved the repeal of the death tax and the reduction of the food tax on two separate votes. Both bills have long been a major priority for many Members of the House Republican Caucus who believe the bills will help taxpayers keep more of their hard-earned money and place Tennessee on better economic footing.
“This is a landmark moment for Tennesseans,” stated House Speaker Beth Harwell (R–Nashville). “We believe, when government revenues are higher, that money doesn’t belong to the State but to taxpayers and should be returned to them immediately. Our Republican Majority was placed here to balance the budget, cut wasteful spending, and lower taxes. Today we carried through on that promise.”
Representative Charles Sargent (R–Franklin), who guided the death tax repeal to full House passage, remarked, “Today is an exciting day. 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. The repeal of the death tax is especially noteworthy because it will help convince the job creators in our State to remain here and help grow our economy. This doesn’t benefit one group; it benefits any Tennessean who is concerned about job growth.”
House Bill 3760, the death tax repeal, phases out the death tax over the next four years, to a complete repeal by 2016. House Bill 3761, the food tax cut, lowers the sales tax rate on food from the current 5.5% to 5.25%, the steepest reduction in many years.
The food tax cut was the responsibility of Representative David Alexander (R–Winchester). Following the final vote on the bill Alexander stated, “This wasn’t a partisan move, it was a move to help every Tennessean. The Governor asked to work with us on lowering the food tax and this is the product of that hard work. It’s something we all can be proud of.”
House Majority Leader Gerald McCormick (R–Chattanooga) added, “It has long been a principle that Republicans believe limited government is best. You do that by cutting taxes and ensuring Tennesseans keep more of the money they earn. In turn they will invest that money, the economy will grow, and new career opportunities will emerge.”
“These tax cuts are proof of our motto: It matters who governs,” concluded Representative Debra Maggart (R–Hendersonville) who serves as the Republican Caucus Chairwoman. “A recent study shows a repeal of the death tax ten years ago would have grown our economy an additional 14%. While the previous generation of leadership failed to take action, this generation of Republican leadership is committed to charting a new path that creates jobs and limits government.”
The bills are now sent to the Senate for action which is expected to come in the next week.
By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — The Republican sponsor of a proposal to reduce the sales tax on groceries in Tennessee said Wednesday he’s open to working with Democrats who have a similar measure if it would help the legislation’s passage.
The bill by Rep. Glen Casada of Franklin was placed behind the budget in the House Finance Subcommittee on Wednesday. It will be revisited if any money is left after the state’s budget is set.
Republican Gov. Bill Haslam has included $2 million for lawmakers to appropriate on items not in his agenda, which means many proposals may not get funded.
Casada’s legislation would reduce the sales tax from 5.5 percent to 5 percent, while the Democrats have a plan that would drop it a half-cent more.
Haslam’s budget contains a proposal to reduce the sales tax to 5.3 percent. Casada said he applauds the governor’s effort, but would like to see the tax reduced further. He estimates his proposal would cost $42 million.
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News release from Tennesseans for Fair Taxation:
Tennesseans across the state are invited to celebrate their First Amendment rights by peacefully assembling in a Statewide Day of Action Nov. 12. The “Untax Groceries! Tax the Wealth!” Day of Action will urge Tennessee Representatives to oppose a Constitutional amendment to permanently ban an income tax in Tennessee.
“Our present state tax system is immoral, unfair and bad for our economic future. It hurts the middle class and the poor. We have one of the highest sales taxes on groceries and other items in the nation. That costs us jobs and revenue that could strengthen education, health care and public safety in Tennessee.” Elizabeth Wright, director of Tennesseans for Fair Taxation (TFT), says.
“But instead of our State Legislators passing a solution that would help those of us in the middle class, they are fighting for a Constitutional ban on an income tax to protect the wealthiest Tennesseans from paying their fair share of taxes,” Wright added.
“Everyone who wants large corporations and the wealthy to pay their fair share of taxes so we can have more jobs and most Tennesseans can pay less in taxes should join us on November 12. We also want to celebrate the rights to free speech and peaceful assembly that were so bravely defended for us all by Occupy Nashville protestors Oct. 28,” says Dick Williams, TFT board chair. “The income tax ban is irresponsible and short-sighted. It would tie the hands of future legislators in accessing viable revenue options. Advocates of this ban have no idea what the future might hold for our state.”
The schedule of events includes Knoxville, Nashville, and Memphis as shown below:
Knoxville: Sat. Nov. 12, 2011 – 2 p.m. to 5 p.m. at the UNITE! Building, 1124 N. Broadway
Memphis: Sat. Nov. 12, 2011 – 3 p.m. to 4 p.m. with press conference at City Hall, 4 p.m.
Nashville: Sat. Nov. 12, 2011 – 10 a.m. to 4 p.m. at Legislative Plaza with Occupy Nashville
The mission of Tennesseans for Fair Taxation since 1984 has been to end the sales tax on food and to create a more fair and progressive tax structure that ensures adequate revenue for the benefit of all Tennesseans.
Some of the buzz-word bills – “guns in cars,” school vouchers, “don’t say gay,” Health Care Compact – were more or less tossed overboard by the Republican majority last week to lighten the load in rush to end to this year’s legislative session.
The measures join other buzz word legislation – wine in grocery stores, birther bills, the nullification bill – in the trash bin of the 2010 session. There are suspicions that still more – “guns on campus,” for example – are soon to meet a similar fate. Of course, they can be recycled next year.
Meanwhile, most of the bills that are aboard the Republican railroad have either been already passed into law or are positioned for approval within the next week or two on party-line votes. Even with some time allotted for Democratic grumbling along the way.
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NASHVILLE, Tenn. (AP) — A House panel has parked a bill to exchange a reduction in Tennessee’s sales tax on groceries with an increase in the tax on sugary drinks.
The House Finance Subcommittee placed the measure sponsored by Democratic Rep. Mike Steward of Nashville among bills to be considered after the rest of the state’s budget plan has been worked out, meaning it’s unlikely to pass this year.
The projected $92 million the state would collect through a 1-cent increase on each ounce of sweetened drinks like Coke or Pepsi would offset the lost revenue from lowering the tax on groceries by 1 percentage point to 4.5 percent.
But local governments would lose about $3 million in state-shared taxes by the change, causing the panel to halt the bill’s progress.
After lengthy testimony pro and con, a Senate committee has once again delayed a vote in legislation that would allow the sale of wine in grocery stores – an indication that proponents still lack the votes needed to advance the measure.
Sen. Bill Ketron, R-Murfreesboro, put off any vote on SB316, which he sponsors, for at least two more weeks. He noted afterwards that Senate Majority Leader Mark Norris, who presumably would have voted for the bill, was absent on Tuesday.
Similar legislation has been actively pushed for three years now in a public relations and lobbying campaign, but has never been put to a vote. The bill is stoutly opposed by lobbyists for liquor and beer businesses, as well as some groups – including the Baptist organizations – that see grocery store wine sales as increasing alcohol consumpution.
From the House Democratic Caucus:
NASHVILLE (March 28, 2011) – We need to get rid of Tennessee’s tax on food and HB 537 is a step in the right direction.
HB 537 offers a simple trade – cut Tennessee’s food tax – one of the highest in the nation – and pay for it with a tax on sugar sweetened beverages, which have been linked by many experts to the epidemic of childhood obesity.
“Families have to buy food, but they can cut back on non-essential items like soda when times get tough,” said the bill’s sponsor, State Representative Mike Stewart.
Even with the proposed tax, soda would remain cheaper than it was in the 1970’s, adjusted for inflation. “With the use of high fructose corn syrup instead of cane sugar, the price of soda has come way down whereas the price of food is going through the roof. This is one way to help a young family buy food without imposing a new tax on businesses that might hurt the economic recovery,” Stewart observed.
Additionally, studies show that much like the increase in the cigarette tax this would likely lower consumption and improve health, an increase in soda taxes also can lower the obesity rate for high risk children.
The fiscal note for the bill shows that the proposed 1% reduction in Tennessee’s food tax, which would reduce Tennessee’s rate to 4.5%, would be entirely paid for by the increased tax on sugar sweetened beverages. Beverages that are not sugar sweetened, such as diet sodas, would be taxed less under the proposed change. “For most families, this will be a well-deserved tax break,” Stewart noted.
The bill is scheduled to be heard in the House Budget Subcommittee on Wednesday, March 30, 2011 at 11:00am.