Tennessee food-cigarette tax swap stalls in subcommittee - WMC Action News 5 - Memphis, Tennessee

Tennessee food-cigarette tax swap stalls in subcommittee

NASHVILLE, Tenn. (AP) - Legislation that would cut Tennessee's sales tax on food in half and increase the cigarette tax to compensate stalled in a House budget subcommittee Wednesday when it was placed among bills to be evaluated after the General Assembly passes the state budget.

The committee voted to place Rep. Gary Odom's legislation "behind the budget." When asked if he thought the bill was dead, the Nashville Democrat seemed somewhat optimistic.

"I'm not going to say that at all," he said. "Sometimes good bills are not easy, and this is a good bill. We're not going to give up on it."

However, the bill is likely done with just a few weeks remaining this session. When bills are in the House budget subcommittee this late, they usually die. The bill's companion is in a Senate subcommittee that has closed, unless the chair of the committee decides otherwise.

Nevertheless, Odom said the legislation is necessary for a number of reasons, one of which is to keep people in Tennessee from going to bordering states that have a lower sales tax on food.

"Tennesseans are going across the borders to buy their groceries because we have the highest tax on food in the nation," he said.

The state's tax is 8.4 percent, compared to the national average of 2 percent.

"It's cruel and unjust," said Brian Miller, executive director of Tennesseans for Fair Taxation. "It's more than four times the average of what we tax to survive."

Under the legislation, the state's food tax would be reduced to 3 percent, while increasing the tax on each cigarette from 1 cent to 3.15 cents. The cigarette tax would then increase by 1 cent per pack each year after that. Tennessee currently has one of the lowest cigarette taxes at 20 cents a pack.

Reducing the tax would decrease state revenues by $226 million, while the initial cigarette tax increase would lead to $227 million in new collections, according to an analysis by the Legislature's Fiscal Review Committee.

Besides compensating for the decreased food tax, advocates say raising the cigarette tax would have health benefits because it would reduce cigarette purchases, especially among teenagers.

"We're either leading or second in the nation in teen smoking," Odom said. "Teens are affected by the cost of cigarettes."

A spokesman for Philip Morris, one of the top cigarette makers, declined comment about the legislation.

But Jeanette Schatz, executive director of Campaign for a Healthy and Responsible Tennessee, said a recent poll shows that Tennessee voters support an increase in the state's cigarette tax to reduce tobacco use, especially among youth.

"It's a health win that will reduce tobacco use and save lives, a fiscal win that will raise revenue to fund vital programs, and a political win that's incredibly popular with Tennessee voters," Schatz said.

(Copyright 2006 by The Associated Press. All Rights Reserved.)

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