NASHVILLE, Tenn. — Gov. Bill Lee wants legislators to approve a 30-day suspension of state and local grocery sales tax to relieve Tennesseans as prices for everyday items continue to rise.
In an announcement made on Thursday morning, Gov. Lee announced his proposed grocery tax suspension will be included in the Fiscal Year 2022-2023 budget amendment, which is planned for delivery on March 29.
“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,” Lee said in a statement on Thursday. “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.”
Estimates show the suspension will cost the state about $80 million according to Bill Fox, a University of Tennessee Economics Professor. But he said Tennessee has a surplus of funds to pay for it because the pandemic stimulus led to a spike in sales tax collections.
"It's put the state government in a very good financial position," he said.
Fox said the tax would cut approximately $5 to $10 off a $100 grocery bill, essentially reverting grocery prices to roughly last year's pre-inflation level.
"Does it change the world? No. But it is helping Tennesseans at a time when we’re most feeling inflation," he said. "All of us go to the grocery store, so it’s a way that everyone sees some reduction in taxes."
Sevier County Food Ministries director Jim Davis welcomed news of the price cut. "The cost of food at the grocery store is just ridiculous," he said. "I think it’ll make a little bit of an impact, it’s still going to be painful to go to the grocery story and buy anything."
He said as prices go up, families buy less food — even though their need hasn't changed. Since Christmas, his food bank has seen an increase in families seeking assistance.
"The more grocery prices and gas prices affect people’s pocketbooks, the more they’re going to come and seek a little bit of assistance from us," Davis said.
Shortly after Gov. Lee’s announcement, Tennessee state representative John Ray Clemmons took to Twitter to voice his disapproval, claiming he and Rep. Bo Mitchell proposed a gas/diesel tax suspension and were shut down.