Tennessee's Tax Track Record

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Knoxville (WVLT) - Tennessee lawmakers have taken little action on raising or lowering state taxes over the past five years, other than the recent cigarette tax legislation.

Volunteer TV's Gary Loe is here with a look at our state's tax track record.

Tennessee ranks at the top in several recent studies for places to live because it's considered a low taxation state. The question now is whether state taxpayers end up paying more in other areas, which would negate/minimize any benefits we receive by not paying a state income tax.

Tennesseans pay the highest tax on groceries in the country. State lawmakers again are considering reducing or eliminating the tax on food. This would become the state's only major tax reduction the past five years.

"Our tax structure here has been staying fairly constant, we've not seen major increases in different taxes," said Dick Goldstine from HG&A Associates.

Knoxville certified public accountant Dick Goldstine says a healthy state economy has helped keep the status quo on taxes.

Despite the expected forty-two cent increase in a pack of cigarettes, lawmakers did make major tax changes in three areas dating back to 2002. Here's the list:

In July 2002, the state sales tax increased from 6-percent to 7-percent.

Also that month, the excise tax went up from 6-percent to 6.5-percent.

And in 2003, the tobacco rate rose from 13 cents to 20 cents.

Although the state sales tax increased five years ago, federal tax laws changed about the same time, which benefited Tennesseans.

"We're in a very high sales tax state, and people since '86 have not been getting the benefit of being able to deduct their sales taxes, but that was changed about four years ago," Goldstine said.

Goldstine says the state is controlling tax increases by encouraging new business development. Legislative watchers say this time, talk of a reduction or elimination of the tax on food could become reality.

"Tennessee's had a very strong economy, witness the surplus that they've had lately, and I think that's attributable to a lot of good management, as well as a favorable economy in Tennessee," Goldstine said.

Next month, West Virginia lowers its sales tax on groceries by one-percent. Neighboring states Kentucky and Ohio do not tax food.

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