By Camm Ashford
NASHVILLE, Tenn.–Gov. Bill Lee on Tuesday announced a proposal for a 30-day suspension of state and local grocery sales tax to provide direct financial relief to Tennesseans amid surging inflation nationwide.
The governor’s proposal was included in the Fiscal Year 2022-2023 budget amendment.
“As Americans see their cost-of-living skyrocket amid historic inflation, suspending the grocery tax is the most effective way to provide direct relief to every Tennessean,” said Gov. Lee. “Our state has the ability to put dollars back in the pockets of hardworking Tennesseans, and I thank members of the General Assembly for their continued partnership in maintaining our fiscally conservative approach.”
The tax suspension would cut approximately $5 to $10 off a $100 grocery bill.
Rep. Yusuf Hakeem, a Democrat who serves District 28, supports the governor’s proposal, but said a longer suspension would be more beneficial.
“I questioned if 30 days is enough time to really have the impact that we would like to see in regards to the ability of the average citizen in our state to be able to reap a benefit from it,” Rep. Hakeem said. “In my view, lowering of the gas tax at this time would have a greater impact when it comes to the family budget.”
Nashville Senator Brenda Gilmore joined Rep. Hakeem in raising questions about whether a gas tax would be the best way to provide short term financial relief for Tennesseans.
“Was there any consideration to helping our constituents with the gas tax,” asked Sen. Gilmore.
Dept. of Finance and Administration Commissioner Butch Eley told the Democratic lawmaker that in proposing a month-long grocery tax “holiday,” the administration looked at the gas tax and found that the grocery tax would be better relief for Tennesseans.
“As it relates to the gas tax, it’s a tax that is gathered at the wholesale level so there are a number of complications,” Commissioner Eley explained. “We felt that ultimately the grocery tax was one that every Tennessean could participate in.”
In published reports, Republican House Speaker Cameron Sexton said the price tag for the proposed 30-day grocery tax suspension likely would be between $80 million and $110 million.
Grocery items are taxable at a rate of 4% (plus local rates of more than 2%) in Tennessee. If Gov. Lee’s proposal is approved, three exclusions to the halted grocery tax will be included: candy, alcohol, and prepared meals.