Cutting the bread: Food tax cut by half cent

Friday, December 28, 2007 at 2:02am

Tennesseans will see a slight reduction in their food costs when checking out of grocery stores like Kroger and Harris Teeter starting Jan. 1, but critics say the half-cent cut in the state’s sales tax on food won’t significantly help family budgets.

The sales tax on items from everything to milk and bread to filet mignon and lobster will now be 5.5 percent as opposed to 6 percent. The local sales tax percentage — 2.25 percent in Davidson County — will not be affected.

But will the reduction make much of a difference for Tennessee families or could lawmakers have done more?

Phil Schoggen, a member of Tennesseans for Fair Taxation, a group that lobbied in favor of the food tax cut, said the half-cent reduction would make the most difference for low-income families who spend a higher proportion of their income on food.

“That’s the most regressive and harshest penalty the state imposes on persons with limited incomes,” Schoggen said of the food tax.

Schoggen and others, however, think the state could have done more to lower the food tax in a year when the state’s coffers overflowed with unexpected revenues numbering in the hundreds of millions.

“I really believe we could have done more for Tennesseans and reduced that further,” said Rep. Beth Harwell (R-Nashville).

The Department of Revenue estimates the state will lose about $40 million in tax revenue per fiscal year as a result of the tax cut.

Meanwhile, low-income Tennessee families will put about $40 into their wallets or pocketbooks for the year as a result of the cut.

The change in the sales tax on food resulted from this past legislative session, when both Democratic and Republican state lawmakers voted overwhelmingly for the politically popular choice to cut one of the highest sales taxes on food in the country.

All, however, did not favor the tax cut.

Veteran Davidson County Democratic Sens. Joe Haynes and Douglas Henry were the only two senators who voted against cutting the sales tax on food.

Their reasoning rests on the sales tax on food being one of if not the most stable source of taxpayer revenue.

If you decrease that stable source of revenue, Henry said, you get closer to bringing back talks of a state income tax.

“I wouldn’t think it would amount to a great deal in the average budget,” Henry said of the sales tax cut.

Lawmakers like House Majority Leader Gary Odom (D-Nashville) want to continue cutting the sales tax on food.

Odom says the goal should be to eliminate it entirely.

“I think we made a significant statement,” Odom said of the food tax cut.

An expected budget shortfall this year — estimated to be as high as $240 million — could derail efforts to further cut the food tax, however.

The sales tax on food does not apply to prepared foods found in delis and restaurants.

Filed under: Sports
By: BADCOPS on 12/31/69 at 6:00

1/2 cent? The food prices have soared, along with everything else and they think the people will notice 1/2 cent?

By: idgaf on 12/31/69 at 6:00

Wait until more bio-fuel plants go online we won't be able to afford to eat.

By: WickedTribe on 12/31/69 at 6:00

I can't afford to eat already. I guess I'll have to stop eating healthy and go to canned food and hot dogs with these prices.

By: crackcitytn on 12/31/69 at 6:00

I bought 1 pkg of potty paper, a pakg of paper towels and 3 AAA batteries at the dollar store and it was over $20. We are so over taxed and every time I hear of idiots wanting to increase our taxes, idiots who want to build bunkers to party in, I break out in hives.

By: Jagman on 12/31/69 at 6:00

I cannot believe a $40 savings for low income people. That's spending $8,000 a year on food. If they are truley low income they should be spending less than that on food. Unless they are from south of the boarder with large families...then I guess they would be on welfare. The tax payers can't win.

By: EasyWriter on 12/31/69 at 6:00

Illegal immigrants are never on welfare.A larger tax cut on food would help to set the stage for an income tax. Good idea.

By: WickedTribe on 12/31/69 at 6:00

We're actually not overtaxed. TN is ranked 49th in taxes per capita. Some people (including myself) feel overtaxed because we have a very regressive tax system. But when you include the wealthy in the equation... we're ranked 49th out of 50 states in taxation.

By: EasyWriter on 12/31/69 at 6:00

I totally agree, Wicked Tribe. Middle-class people fight the income tax to the benefit of rich people and the detriment of themselves. It's like a chicken voting for Col. Sanders.

By: idgaf on 12/31/69 at 6:00

By: EasyWriter on 12/28/07 Illegal immigrants are never on welfare.*****************************Once they drop their anchor baby they are eligible for food stamps.

By: JDG on 12/31/69 at 6:00

Ok easy, define "middle class

By: NewYorker1 on 12/31/69 at 6:00

If a state income tax is enforced, I have a hard time believing the sales tax is going anywhere. I truly believe we'll have both. The bright side, however, is I'm still beautiful.

By: WickedTribe on 12/31/69 at 6:00

No JDG, when sales tax is the only tax your state has, poor and middle class people pay a much larger percentage of their income than rich people do, because poor and middle class spend a much larger percentage of their income on store bought items, including food. So if you look at the sales tax as a percentage of income rather than as a percentage of what they spend, the tax is much higher on poorer people than on more rich people.I don't think anyone in his right mind thinks that's ok. And if you do, you should start with our federal government who tax the rich more than the poor due to the income tax bracket system.

By: WickedTribe on 12/31/69 at 6:00

"If a state income tax is enforced, I have a hard time believing the sales tax is going anywhere. I truly believe we'll have both."You're absolutely right. I think the main reason we haven't moved to an income tax is because there has not been a single realistic proposition for tax change yet. I believe the last proposed change called for about a 5% income tax with a continuing 5% sales tax. That would be so, so much higher overall tax than what we have now that it's just absolutely ludicrous. The point is to distribute the taxation so the wealthy pay their fair share and the poor aren't being punished, not to exponentially increase the overall tax revenue.

By: JDG on 12/31/69 at 6:00

wicked, your argument is the classic liberal attempt to procur something for nothing for a certain segment of the population, namely the "poor". First, define your terms. Who is "poor"? Who is "rich"? Do the "poor" buy things with their money other than food or is their entire income spent on necessities? Do they buy new cars, do they buy appliances, do they buy smokes, and alchohol? Then lets decide how you want to become "fairer". What in the world is "fair" about taxing a producer at a higher rate than a non-producer. What is "fair" about you (the editorial you)being allowed to consume scarce resources at the expense of someone else, without contribution? What is "fair" about an economic policy that dictates that income be re-distributed in the first place. Why should a wage earner be penalized because education and hard work has enabled him/her to EARN more income for themselves? The contribution to the economic well being of this state by the earners far exceeds that of the non-earners, and yet you continue to espouse the viewpoint that it is not enough. When is it enough? You are right, I don't give a rat's rear about "percentage of income". As a citizen of this state, anyone should and must contribute to the overall well being, and to specify a certain class of people as being exempt from contribution is mind-numbingly ridiculous.

By: NewYorker1 on 12/31/69 at 6:00

WickedTribe, you forgot to quote how beautiful I am in your post.

By: JDG on 12/31/69 at 6:00

Why, wicked? Why do they get an exemption that is not available to me? If it weren't for the sales tax, most of the "poor" (still waiting on a definition) would pay nothing. There are already numerous ways for the "poor" to supplement their means of living. Food stamps, EIC, WIC,. Next you will be telling me that the portion of rent the landlord charges to cover his taxes should not be included in the rent for a "poor" person, or that they should get 18 cents (or whatever) discount at the pump. I guess you think some people should not be accountable for paying for consumption, and that flies in the face of common sense to me. Draw a line in the sand, as to whom you are trying to exempt and we can start to talk about real numbers. Again, percentge of income is irrelevant if you consume the same things that I do.

By: WickedTribe on 12/31/69 at 6:00

The rich don't have to pay more taxes than the poor, JDG. It could be equal (although, again, not even our federal government has equal tax). Right now, it isn't equal. Right now, the poor pay a larger percentage of their income in state taxes than the rich do. No one has said anything about the poor being "exempt from contribution". It's about the poor paying a "contribution" on par with their income. I'm not sure what you're reading but it's not what I'm typing.

By: WickedTribe on 12/31/69 at 6:00

Well JDG, by poor I do not mean people on welfare (food stamps, etc). I mean people who have a job and don't make much money. People who pay federal income tax and would also pay state income tax. No where at any time have I referred to people who would not pay a state income tax if we had that instead of a sales tax.

By: TharonChandler on 12/31/69 at 6:00

"Kroger and Hans Teeter"?What about Dillon's and Price Pfister?Actually Dillon's is a part of Kroger, or the "discount card" still works the same.As for the "price fixer

By: NewYorker1 on 12/31/69 at 6:00

So, a person making $15K per year should pay less in sales taxes for a pair of Prada boots than a person who makes $500K per year? That's crazy.

By: TharonChandler on 12/31/69 at 6:00

NY1, that is the type of rationale I'm counting on with my "YMCA" membership application; I need the exercise, bad.

By: EasyWriter on 12/31/69 at 6:00

why do the rich get so many tax breaks under the current sales tax law. for example, expensive cars have a reduced sales tax rate after a certain point? that's not fair.

By: TharonChandler on 12/31/69 at 6:00

EW, I agree with your premise though it still will not ever "sell" a "state income tax" to the people of Tennessee.I'm all for "taxing the wealthiest Americans

By: Fundit on 12/31/69 at 6:00

Does Prada make boots?

By: RoyceEBurrageJR on 12/31/69 at 6:00

Tax the fees charged by Tennessee's Elite Service Providers such as lawyers, doctors, optometrists, and accounts, as is required of auto mechanics and similar service providers, and we could do away with the sales tax on food all together.But that will never happen, especially for lawyers. The Tennessee Bar estimates they will have a majority of seats in both the upper and lower houses of our State Legislature within the next few election cycles.Who paid the incentives for Nissan to move their US Headquarters to Tennessee?