sales tax

Lee proposes 1-month pause in sales tax on groceries

Gov. Bill Lee delivers his State of the State Address on Jan. 31, 2022. (Erik Schelzig)

Gov. Bill Lee plans to propose a one-month pause in Tennessee’s 4% sales tax on groceries when he unveils his amendments to the annual spending plan for the budget year starting on July 1.

When Republican lawmakers in 2020 proposed a two-month “food tax holiday,” the proposal was estimated to cost the state about $100 million in forgone revenue.

Legislative Democrats have urged Lee to consider a moratorium on the state’s 27.4 tax on each gallon of gasoline amid spiking prices at the pump. Senate Republicans earlier this year floated a one-year break on the state’s $35 license plate fees. The Revenue Department collected $359 million worth of tag registrations in 2021.

Here’s the full release from the governor’s office:+

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced his proposal for a 30-day suspension of state and local grocery sales tax to provide direct financial relief to Tennesseans amid surging inflation nationwide.

“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,” said Gov. Lee. “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.” 

The Governor’s proposal to suspend state and local sales tax on groceries for 30 days will be included in the Fiscal Year 2022-2023 budget amendment, which will be delivered on Tuesday, March 29.

Lee will host a roundtable with business leaders in Covington today, Thursday, March 24, to discuss the tax cut proposal and hear about the local impacts of nationwide economic challenges.

Tennessee revenue collections obliterate estimates by $600M in April

The state Capitol on March 16, 2020. (Erik Schelzig, Tennessee Journal)

Tennessee’s general fund revenue collections were nearly $600 million above estimates in April, bringing the state’s surplus to $1.9 billion through the first nine months of the budget year.

Sales tax revenues beat projections by $285 million in April and were 32% higher than the same month last year. Collections reflect economic activity in the previous month.

Online sales tax collections represent 46.5% of all sales tax growth in the state since the beginning of the budget year.

Corporate franchise and excise taxes were $346 million more than expected in April, with a growth rate of 320% compared with last April.

Here’s the full release from the Department of Finance:

Tennessee Department of Finance and Administration Commissioner Butch Eley today announced that revenues for April exceeded the monthly revenues from the same month last year, which was at the beginning of the pandemic’s impact in Tennessee. Overall state revenues for April were $2.5 billion, which is $1.3 billion more than April 2020, and $596.7 million more than the budgeted estimates. The growth rate for all taxes in April was 90.90 percent.

“It’s important to remember that March and April of 2020 were the only two months where the state experienced a negative growth rate for collections during the pandemic, so in an effort to make realistic analysis, we’ve looked at collections for April 2019,” Eley said. “When we compare April of this year to 2020, the growth is 90.90 percent but compared to April 2019, the April growth rate for all taxes is 15.01 percent.

“Sales tax collections continue to reflect strong consumer activity and increased inflationary pressures that are beginning to appear in the cost of goods sold, as reflected in the latest CPI report. State corporate tax revenues greatly outperformed budgeted expectations as well, with many local companies experiencing a growth in earnings despite difficult circumstances. We should also keep in mind that April income tax receipts were lower than budgeted estimates due to a filing extension that moves the tax deadline into next month.

“Prior year month-to-month tax receipt comparisons for this month and the remainder of the year will appear distorted as periods of economic stoppage from the pandemic and the movement of multiple tax filing dates affect reported growth rates.”

On an accrual basis, April is the ninth month in the 2020-2021 fiscal year.

General fund revenues exceeded budgeted estimates by $599.9 million, while the four other funds that share in state tax revenues were $3.2 million less than the estimates.

Sales tax revenues were $284.9 million more than the estimate for April, 40.20 percent more than April 2020, and 31.78% more than April 2019. April sales tax revenues reflect retail business activity that occurred in March. For nine months, revenues are $1.2 billion higher than estimated. The year-to-date growth rate for nine months is 10.60 percent. Remote sales and marketplace facilitator laws contributed $54.9 million to sales tax receipts in the month of April. For nine months, online sales tax revenues represent 46.5 percent of all sales tax growth to the state.

Franchise and excise tax revenues combined were $346 million higher than the budgeted estimate in April, and the growth rate compared to April 2020 was positive 319.30 percent. For nine months, revenues are $765 million more than the estimate and the year-to-date growth rate is 47.22 percent.

Gasoline and motor fuel revenues for April decreased by 0.75 percent compared to April 2020 and they were $2.4 million less than the budgeted estimate of $104.7 million. For nine months revenues are less than estimated by $18.8 million.

Motor vehicle registration revenues were $4.7 million more than the April estimate, and on a year-to-date basis they are $13.6 million more than estimates.

Tobacco tax revenues were $1.5 million more than the April budgeted estimate of $17.5 million. For nine months, they are $9.5 million less than the budgeted estimate.

Hall income tax revenues for April were $58.5 million less than the budgeted estimate. A filing extension was granted for income taxes moving the filing date from April 15, 2021 to May 17, 2021.  (See:

Privilege tax revenues were $14.2 million more than the April estimate, and on a year-to-date basis, August through April, revenues are $72.4 million more than the estimate.

Business tax revenues were $7.9 million more than the April estimate. For nine months, revenues are $35 million more than the budgeted estimate.

Mixed drink, or liquor-by-the-drink, taxes were $1.2 million less than the April estimate, and on a year-to-date basis, revenues are $24.7 million less than the budgeted estimate.

All other taxes were less than budgeted estimates by a net of $0.4 million.

Year-to-date revenues, August through April, are $2 billion more than the budgeted estimate. The growth rate for eight months is 14.72 percent. General fund revenues are $1.9 billion more than the budgeted estimate and the four other funds are $66.2 million more than estimated.

The budgeted revenue estimates for 2020-2021 are based on the State Funding Board’s consensus recommendation of November 26, 2019 and adopted by the second session of the 111th General Assembly in June 2020. Also incorporated in the estimates are any changes in revenue enacted during the 2020 session of the General Assembly. These estimates are available on the state’s website at

Strickland re-elected mayor of Memphis, voters OK sales tax hike

Incumbent Jim Strickland was re-elected mayor Memphis and voters in the city approved a proposal to hike the city’s local option sales tax from 2.25% to 2.75% to restore benefits that had been cut for for police and firefighters in 2015.

“Politics can be pretty toxic… Today’s vote shows that it doesn’t have to be,” the Commercial Appeal quoted Strickland as telling supporters after the vote. “We can disagree without being divisive. That is the campaign I have run. That is the way that I lead. I have been and will continue to be everybody’s mayor.”

Strickland took 62% of the vote. Willie Herenton, a former 18-year mayor, received 29%. County Commissioner Tami Sawyer got 7%. None of the other eight candidates (including the eternal Prince Mongo) received more than 0.5%.

The sales tax referendum passed on a 52%-48% vote. Officials were quick to point out that voters can’t dictate how sales tax money is spent, but that they will follow the will of the electorate in dedicating the money toward police and firefighters.


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