TFT: Tax Proposals Bad for Tennessee

New Proposal Funds both Food Tax Cut and Education Improvements

A new proposal presented at the State Legislature Wednesday would both fund the Governor's education initiative and cut the state food tax by a third, from 6 to 4%. Instead of raising the cigarette tax by 40 cents as the Governor has proposed, the new proposal would raise the cigarette tax by 67 cents, with 40 cents going toward the Governor's education improvements and 27 cents toward a food tax reduction. The new proposal also includes a comparable increase in the tax on other tobacco products from cigars to loose tobacco.


"Tennesseans should not have to choose between education funding or cutting the nation's highest food tax," states Dick Williams, Legislative Liaison with Tennesseans for Fair Taxation (TFT). "Thanks to this new proposal and the leadership of people like Rep. David Shepard, we're beginning to shift the debate to how we can do both."

"If we're going to vote for a 40 cent increase in the cigarette tax to fund education, I think a lot of my colleagues up here would like to add another 22 or 27 cents so we can also cut the state's high food tax," states Rep. David Shepard of Dickson, legislative sponsor of the Food Tax - Cigarette Tax Swap. The new proposal was presented to the House Budget Subcommittee as an amendment to the Food Tax - Cigarette Tax Swap.

Blended Tax Swap with proposed amendment:

Allocate approximately $220 million toward the general fund to fund the Governor’s education initiatives and other items currently budgeted for in the Governor’s bill.
Cut the state food tax by a third, from 6 to 4%. Local option taxes are not affected.
Raise the cigarette tax by 67 cents a pack to a new rate of 87 cents, with an escalator of 1 cent per pack per year over 10 years to help ensure the bill remains on solid fiscal ground for years to come.
Raise the tax on other tobacco products, including pipe tobacco, cigars, stogies, loose tobacco, and chewing tobacco from 6.6% of wholesale value to 19.8% of wholesale value.
Benefits of the new plan:

Funds the Governor’s education plan currently being debated in the General Assembly.
Cut the state food tax by a third:
Saving every Tennessee family enough to buy an additional week’s worth of groceries each year.
Helping grocery stores in border communities compete with their neighbors over the state line.
Raise the cigarette tax to a level that will promote better health among teenagers and others while helping the state to recoup health care expenses incurred by the state due to smoking and the use of other tobacco products.
While Tennessee has one of the lowest cigarette taxes in the nation, currently 1/5th the national average, we also have the highest food tax in the nation and our education system is at the bottom of the nation in public investment and performance. This blended Swap brings all of these a little more toward the middle and straightens out Tennessee’s backwards priorities.