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For Immediate Release - February 13, 2007
For more information:
- Beverly Owens, (901) 276-0802, cell (901)
406-7878
- Hazel Longstreet, cell (901) 268-2614
- Tiffany Hartung, (865) 687-9600, cell
(865) 684-3715
Arkansas Cuts State Food Tax in Half,
Pressure Builds for Tennessee to Do Same
Today, Arkansas Governor Mike Beebe will sign into law a
bill that will cut the state food tax in half, from 6% to
3%, beginning July 2007 [Note: The actual bill signed
was later rescheduled to Thursday, Feb. 15]. The bill
was approved unanimously by both chambers of the Arkansas
General Assembly in recent weeks. Like Tennessee, local governments
can add onto the state rate, bringing Arkansas' new state
and local food tax to 5%. This is a first step toward Gov.
Beebe's goal of completely phasing-out the state food tax,
leaving only the local tax of 2%.
At the same time, the Mississippi legislature has a proposal
before its Legislature again this year that would cut the
7% food tax in half to 3.5% over 2 years, while replacing
the revenue with a increase in cigarette tax, similar to the
Food Tax – Cigarette Tax Swap Bill proposed in Tennessee.
The result is that Tennessee is increasingly becoming an
island of high food taxes. All of Tennessee’s neighboring
states already have a lower food tax. The lowest is Kentucky,
which has no food tax at all, followed by Virginia, North
Carolina, and Georgia, whose combined state and local tax
is about 1/4th the Tennessee rate.
“50% of Tennessee’s population lives in counties
that border another state,” notes Hazel Longstreet,
spokesperson for Tennesseans for Fair Taxation (TFT), commenting
on the border-drain problem. Tennessee grocers in Clarksville,
Bristol, Chattanooga, and a host of smaller towns along the
northern, eastern, and southeastern borders have long had
to deal with competitors across the state line where the sales
tax is either zero or significantly lower than in Tennessee.
With the changes going on in Arkansas, and the possible changes
in Mississippi, this border-drain problem will now be moving
to Memphis, Tennessee's largest city. Longstreet adds, “You
can’t blame Memphis residents for crossing the state
line to save money on their groceries when the food tax is
that much lower.” As Tennessee continues to hold onto
the nation’s highest average food tax at 8.35%, and
as high as 8.75% in some counties, Tennessee can expect to
loose more revenue as Tennesseans cross the state line to
do their grocery shopping, hurting home-grown businesses in
the process.
"This also says something about our values as a people,"
adds Longstreet. "Most states recognize that food is
a basic human necessity that should not be taxed, and states
across the country are exempting or reducing their sales tax
on food. That's a core value. It's time Tennessee does the
same."
"For Tennesseans everywhere, the food tax amounts to
a whole month's worth of groceries that they give up each
year," comments Dave McIlwaine, state chair of TFT. While
elimination of the food tax would help all Tennessee families,
those that would benefit the most are low and middle-income
families who spend a much larger portion of their income on
groceries. Most low-income families for example spend about
a fourth of their total budget on groceries.
TFT supporters and their allies in Memphis are currently
planning a press event for Thursday as legislators return
from Nashville (Details to follow). "We'll be here Thursday
to call upon members of the Memphis Legislative Delegation
to support efforts to cut the food tax while ensuring continued
funding for schools and other important public structures
by replacing the lost revenue."
One option to cut Tennessee's food tax is the Food Tax -
Cigarette Tax Swap being supported by TFT. The bill will cut
the state food tax in half from 6 to 3% (local sales taxes
are not affected), while raising the cigarette tax, currently
one of the nation's lowest. With the nation's highest average
food tax and one of the lowest cigarette taxes, this bill
helps bring both taxes a little toward the middle.
"This is about helping Tennessee families make ends
meet, but it's also about helping grocers in border counties
compete," states McIlwaine, "It has overwhelming
public support, It's a win-win proposal for everyone really.
Other than the tobacco companies, the only real opposition
we have is the Governor. That's why we're calling on state
legislators to exercise leadership on this important decision
and pass the Food Tax - Cigarette Tax Swap.”
Additional information & links:
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