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Tennesseans Chew On Food Tax Issue

April 9, 2007

Cutting the sales tax on food in Tennessee needs to be part of a balanced diet for the state, according to tax watchdogs. There are several proposals to eliminate the tax only on certain foods, cut the tax, or give Tennesseans a food tax "holiday" for a couple of months. Dave McIlwaine with Tennesseans for Fair Taxation says he likes the idea of cutting the tax on food in half, but with an important detail -- a way to make up for lost state revenue.

"We propose a revenue-neutral balancing way to collect taxes by raising the cigarette tax to 44 or 45 percent."

McIlwaine adds that the tax cut must be paid for with a recurring revenue source, since it would mean less revenue year after year. There is some talk of using state surplus funds to replace the tax cut revenue, at least for one year. Tennessee’s state and local food tax is one of the highest in the nation. Thirty-five states don’t tax groceries.

Of course, the idea of raising the tobacco tax in a state that benefits from tobacco agriculture can be controversial. McIlwaine puts it in perspective.

"It would still keep Tennessee’s tobacco tax way below the national average and, in fact for the most part, below the average of surrounding states."

House Majority Leader Rep. Gary Odom has announced an initiative to eliminate the grocery tax on key food items. There also are several Republican initiatives to cut the tax, including a food tax holiday. More info at www.yourtax.org.

Deborah Smith/Chris Thomas, Public News Service - TN