Newsroom

February 8, 2007 – For immediate release...

Contacts:

• David McIlwaine, State Chair, 865-310-5905
• Hazel Longstreet, Board Secretary, 901-744-9733
• Bill Howell, Middle TN Org., 615-289-1397
• Tiffany Hartung, East TN Org., 865-684-3715

Coalition renews call for food tax cut following Governor's address
Food tax cut must be part of any cigarette tax increase, coalition says

"Tennesseans value hard work and a fair chance at success," states Dave McIlwaine, State Chair of Tennesseans for Fair Taxation (TFT). "But Tennessee's high sales tax, and especially the sales tax on food, means the chance of success for some is less fair than for others. If we are to achieve a broad prosperity in the state, we need to look not just at how much revenue our state is raising, but how fairly it raises it."

"Earlier this week, the Governor claimed in his State-of-the-State address that Tennessee is a low-tax state, but that's just not the reality for many Tennesseans," states McIlwaine. "For many, the grocery store check-out line offers a stark contrast to Tennessee's low-tax image as hard-working Tennesseans struggle to put food on the family table while paying the highest food tax in the land. That's just not right and it's time to change it."

According to a recent analysis from the Institute on Taxation and Economic Policy (ITEP), a tax-policy research group based in Washington, Tennessee taxes as a whole are among the nation's lowest, but it's not low for everyone. "For almost half of all Tennesseans, the bottom 40% of income-earners, state and local taxes are actually higher than the national average," adds McIlwaine. "It's the upper-middle and higher-income families that skew the state average downward. In fact, the top 1% of income earners pay less than half the national average in state and local taxes."

At the heart of this unequal distribution of taxes is Tennessee's high sales tax on groceries and other basic necessities. Food makes up one-fourth of the budget for many low-income families in Tennessee, and it's a significant portion of the family budget for many middle-income families as well. For the wealthy, groceries are less than 5% of their family budget. "Regardless of how the revenue is spent, a cigarette tax increase without an offsetting cut in the food tax, as the Governor is proposing, only works to deepen the inequities of an already unjust tax system," adds McIlwaine.

TFT is supporting the bi-partisan Food Tax - Cigarette Tax Swap that will cut the state food tax in half, from 6 to 3% (the local option tax is not affected), paid for with a 44 cent increase in the state cigarette tax. After the cigarette tax increase, Tennessee's new cigarette tax of 64 cents a pack will still be far less than the national average of $1. Meanwhile, the savings from the reduced food tax will save every family in Tennessee enough to buy an extra 11 days worth of groceries, or $160 for a family that spends $500 a month on groceries.

"There are a lot of things that Gov. Bredesen has done right, but when it comes to the food tax, he's just plain wrong and he's out of step with the majority of Tennesseans," adds McIlwaine, "We simply cannot support a cigarette tax increase unless it also includes a significant reduction in the state food tax. That's the bottom line. We're calling on state legislators to take the initiative to give Tennesseans the food tax cut that is long overdue."