Governor Haslam’s approach to the state budget is to manage conservatively by investing in priorities that will bring a measurable return on investment to the state, replenishing reserves, avoiding debt, and finding efficiencies to put more money back in the hands of taxpayers.
What is Changing?
During tough economic times, it is especially important to alleviate the tax burden on necessities like food. Reducing the sales tax on food represents a tax cut for all Tennesseans.
Last year Governor Haslam asked the General Assembly to lower the sales tax on food from 5.5 percent to 5.25 percent. This year he has proposed to reduce the tax by another .25 percent, which would bring the sales tax on food to 5.0 percent.
Sales Tax on Food FY2012
Sales Tax on Food FY 2013
Proposed Sales Tax on Food FY14
Although the Tax Foundation ranks Tennessee as having the third lowest overall tax burden per capita in the country, at present we have the second highest sales tax rate on food in the Southeast and the fourth highest among all states.
Information obtained from the Federation of Tax Administrators. In AR, GA, LA and NC food sales are subject to local taxes. In VA both the state sales tax rate and the food tax are subject to a 1.0 percent tax levied by local governments.
According to Tennessee Department of Revenue projections, this tax cut will result in a decrease in revenue of $21,190,000 to the state and $613,000 in state-shared sales tax revenue to local governments.
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