Will suspension of food tax for a month help most families?

Published 11:14 am Friday, May 13, 2022

Gov. Bill Lee is proposing a suspension of the state and local grocery tax for 30 days, beginning as early as August. The state tax on food is 4 percent.
Tennesseans like most Americans are facing high prices for food, gas, and other supplies. Inflation is at a 40-year high. According to the USDA the cost of farm-level fruit is nearly 4 percent higher than last year.
Local grocery tax varies across the state, but the tax relief excludes certain items such as alcohol and candy.
In proposing the sales tax suspension, Gov. Lee said: “As Americans see their cost-of-living skyrocket amid historic inflation, suspending the grocery tax is the most effective way to provide direct relief to every Tennessean. Our state has the ability to put dollars back in the pockets of hardworking Tennesseans, and I thank members of the General Assembly for their continued partnership in maintaining our fiscally conservative approach.’
Many households are being forced to adjust their grocery shopping lists or seek assistance where free food is distributed. However, food banks, too, are feeling the pinch. What’s more, donations of foods are down, even as the number of people seeking help remains elevated.
Most families have noticed that many items are commanding higher prices, and they are managing. However, it’s different for people with limited means. Any time someone is low income, that means they’re spending a higher percentage on needs like food and housing. When prices go up, they have less slack in their budgets to offset and they are quick to fall into hardship.
Before the run-up in prices — driven by supply chain knots and rising labor costs — many families bought ground beef for meatloaf or hamburgers to serve once or twice a week…not now, as the price of ground beef has skyrocketed, along with the prices of poultry, fish, and eggs.
The run-up in costs at the supermarket comes even as gasoline prices have risen. In addition, the mammoth assistance programs rolled out by the federal government in response to the pandemic in 2020 have largely lapsed. While some households built up savings from government payments, others have little room for extra expenses.
It’s not just food and gasoline, almost everything a person needs to buy is more expensive. And, the blame is placed on the pandemic. Might as well blame the pandemic as anything.
And, when gas prices go up, it affects everything. Even the apple you pick up at the grocery store is going to contain some energy cost because a truck had to carry it to your grocery store.
The United States experienced relatively low inflation over the last five years, but in the last year that trend changed fast enough that people noticed. It’s noticeable at the grocery store, at the gas pump, and for service providers.
The pandemic created a weird economic crisis. On one side, millions of people lost their jobs and relied on unemployment to make ends meet. On the other hand, people kept their jobs but cut spending by skipping vacations, concerts and sporting events while receiving federal stimulus payments. Those people watched their bank accounts grow.
But at some point, that extra cash will run out and the demand for new televisions, furniture and clothes will ease. At that point, prices should hold steady. But economists aren’t sure when that will happen.
The fallout of the high prices in the end will be severe. When basics are shooting up in price, households cannot put off their purchase or buy something cheaper. This summer you either switch the air conditioning or not. You either have enough food or you go hungry.
The fact is that it’s costing more to feed your family, to drive to work and to the grocery store, and all the government can offer is a few cents off your grocery bill by eliminating the sales tax on food for a month.

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