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States with budget surpluses are looking to suspend taxes on groceries, gas, income, and more to help offset the impact of high inflation.
Gov. Bill Lee has proposed a 30-day suspension of state and local grocery sales tax to relieve Tennesseans as prices for everyday items continue to climb.
With voters grumbling and midterm elections looming, governors and state legislators across the nation are scrambling to attack the inflation crisis.
At least 22 governors have proposed cutting or suspending gas taxes, while seven states, including Tennessee, are considering measures to alleviate food costs.
States are flush with cash after reaping a windfall from the federal government in the early going of the pandemic, when federal stimulus dollars were flowing. So, they’ve got some money to spend. Also, local governments, including Carter County, have extra cash and are looking for ways to spend it, and a number of agencies are there with requests for help, including volunteer fire departments, the city water department, etc.
Temporary tax cuts are often hard to roll back. But with inflation outpacing wage gains, many Americans are losing ground. The cost of good food is going up and experts say there’s not a lot of relief in sight.
“Tennesseans like Americans are facing high prices for food, for gas, supplies for everything. Inflation is at a 40-year-high,” said Governor Lee.
The state tax on food is 4%.
Local grocery tax varies, but the tax relief excludes certain items such as alcohol and candy.
We actually looked at the best way to get relief to the most Tennesseans and there are a number of ways to do that but we believe the grocery tax is the thing all Tennesseans want,” said Lee.
A 30-day grocery tax suspension proposed by Tennessee Gov. Bill Lee collectively could save consumers $50 million.
Last year’s state budget included a one-week grocery and restaurant tax holiday, which was estimated to have a $38.5 million tax impact.
“While this temporary tax relief is a well-intentioned way to fight the inflation caused by terrible federal policy, and while it will certainly help middle-class Tennesseans, we will continue to focus on opportunities to make permanent tax cuts that will help Tennesseans long-term,” Beacon Center of Tennessee Chief Executive Officer Justin Owen said.
The 30-day grocery tax suspension just isn’t enough…three months would be ideal for most Tennessee families. Sure, there is a lot of free food out there for families to participate in, but what about nursing homes, schools, even restaurants who must buy and prepare food. A suspension of the food tax will help everyone. But, 30 days is just not long enough to help families, especially those in need.