Why Tennessee’s grocery tax holiday is unlikely this year

NASHVILLE, Tenn. (WKRN) — Tennessee isn’t planning on bringing back its food tax holiday from the last few years.

“Two years ago, we had really good growth in our revenue. We had two months, I believe, of sales tax holiday on groceries,” Dept. of Finance & Administration Commissioner Jim Bryson said. “Last year, we had even more revenue, I think we did three months of sales tax relief on groceries. This year, our revenue is flat.”

📧 Have breaking come to you: Subscribe to News 2 email alerts

But where is some of that flattening of revenue coming from?

“I think it’s an economic factor, it’s really mostly in franchise and excise tax, which is known to be a very volatile tax,” Dept. of Revenue Commissioner David Gerregano said. “It sort of has a trajectory, but year to year, it can vary quite a bit.”

But this year, Gov. Bill Lee (R-Tennessee) is looking to substantially or entirely cut the franchise tax and refund businesses who’ve paid it in the last three years, a move that has infuriated state Democrats who say it’s a windfall for big corporations.

“They love to talk about how they run government like a business. But we’re not even doing right by our own shareholders, which are our constituents, the taxpayers,” Sen. Charlane Oliver (D-Nashville) told reporters last week. “We’re shaving money off the top, so they’re not even doing their own playbook right.”

But Bryson pushed back on that notion, arguing that it isn’t just big businesses who pay a franchise tax.

Read the latest from the TN State Capitol Newsroom

It’s based on whatever is larger between a business’s net worth or property value at the end of each year, and the size of the business doesn’t matter.

“The franchise tax is paid by businesses of all sizes. There are big businesses but there’s also businesses that are single proprietors, and they’re people like your landscapers, your realtors and those people that have paid this tax,” Bryson said. “They deserve equal treatment just like everybody else does.”

Democrats have pushed for a complete elimination of the food tax instead, while also expressing frustration over what they say is secrecy around the potential cutting of franchise taxes.

“Look where the money is going,” House Democratic Caucus Chair John Ray Clemmons (D-Nashville) said. “This enormous corporate tax cut that’s being proposed on the back of some legal argument they won’t even share.”

Republican state leaders have pointed toward a Maryland Supreme Court case as needing to change our laws.

⏩ Read today’s top stories on wkrn.com

But at least up to this point, no lawmaker will publicly confirm that there is an impending lawsuit prompting the change. Instead, they say it’s a precautionary measure.

“We know from the Attorney General and from the Dept. of Revenue that there’s a legal risk. One of the things we want to make sure is that we hedge against that risk,” Bryson said. “If we did not do this now and there was a lawsuit filed at some point down the road, we would have to put money aside as a reserve against that lawsuit anyway.”

For the latest news, weather, sports, and streaming video, head to WKRN News 2.