Nashville Democrats pitch plan to slash state grocery tax
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State Sen. Charlane Oliver and state Rep. Aftyn Behn revived their long-shot push to eliminate the state tax on groceries.
Why it matters: Eliminating the 4% state grocery tax would save the average Tennessee family at least $400 annually, according to a 2024 estimate.
The big picture: There are several proposals in the General Assembly this year to at least partially reduce the taxes Tennesseans pay on groceries.
- The two Nashville Democrats said their plan wouldn't impact the state budget because it would also close corporate tax loopholes to offset the lost grocery tax revenue.
- Oliver and Behn's plan forces multinational corporations to pay state business taxes to fill the $800 million revenue gap from the the grocery tax.
What they're saying: Behn said at a press conference on Monday that corporations frequently shift profits to offshore tax shelters, allowing them to avoid paying business taxes in Tennessee.
- "Right now in Tennessee, working families pay taxes every time they buy groceries, but many billion-dollar corporations operating in our state pay little to no corporate taxes," Behn said.
Yes, but: Since Oliver and Behn are Democrats working in a legislature where business-friendly Republicans have a supermajority, their legislation faces an uphill battle.
Flashback: Behn and Oliver pushed the grocery tax cut in previous legislative sessions, but the legislation never advanced.
- In 2024, state Rep. William Lamberth, a Republican, passed legislation allowing local governments to lower their portion of the sales tax on groceries.
- The city of Hendersonville took advantage of the law and reduced its grocery tax for local shoppers.
Zoom in: Mayor Freddie O'Connell expressed an interest in Nashville lowering its grocery tax. However, his administration said the existing law might not apply to metropolitan governments like Nashville.
The latest: In response, Lamberth filed legislation this session to make the technical fix so Metro could participate.
- Sen. Mark Pody and Rep. Mike Sparks, both Republicans, are pushing separate legislation that eliminates the tax on fresh fruit and vegetables, while maintaining the state tax on other kinds of groceries.
- Behn criticized the Republicans for not including offsetting revenues in their tax cut plan, which she said could mean reduction in state services in the future.
What's next: The produce tax bill is scheduled for a House subcommittee hearing on Wednesday.
- Oliver and Behn's legislation is up for debate in a Senate subcommittee next week.