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TN Democratic Leaders Call for Sales Tax Reform

February 8, 2012

NASHVILLE, Tenn. – After 21 months of increased state revenues, Gov. Bill Haslam is proposing a bill that would lower the sales tax on food purchases in Tennessee, and also broaden the state's inheritance tax exemption.

Tennessee's Democratic Party leaders counter that the proposed cuts should focus on less fortunate families, and not the wealthy. Democratic Party Chairman Chip Forrester thinks the proposal is a step in the right direction, but observes that it does little to help those who are struggling to put healthy food on the table.

"The governor did outline the tax cuts that he proposed, which we really feel are for special interests and not deep enough for middle-class, working Tennesseans."

Sales taxes generate 54 percent of Tennessee's state tax revenue.

Gov. Haslam is convinced that the proposal would help all Tennesseans, although Dick Williams – spokesman for the group Tennesseans for Fair Taxation (TFT) – says the additional money may be better suited elsewhere.

"That small amount of reduction of the food tax might actually be better spent on maintaining certain other services. We always appreciate any attempt to reduce the tax on food."

While state revenues may have increased, says Williams, the amounts are still lower than they once were. He describes TFT members as being "conflicted" about Gov. Haslam's proposal, because it fails to identify where or how the lost revenue will be replaced. Ultimately, adds Williams, that could lead to more problems down the road.

However, Forrester suggests that Democrats have a potential solution to that problem.

"We've identified over $500 million in tax breaks for Tennessee corporations. If we closed those loopholes, that would entirely deal with being able to eliminate the sales tax."

At an average state and local rate of 7.9 percent, Tennessee has the third highest average food tax in the nation. The TFT's view is that by eliminating the tax on food, the average family would save enough annually to buy a whole month's worth of groceries.

Bo Bradshaw, Public News Service - TN