Governor Defends Rise in Cigarette Tax for Education

Governor Phil Bredesen defended his plan to use a cigarette tax for education rather than for reducing sales tax on food, while speaking to members of the N–Double A-CP today/yesterday.

Opponents of the governor’s plan argue that sales tax on food is the most regressive part of Tennessee’s current system. But the governor pointed to a study by state economist Bill Fox to argue that a tax swap won’t do anything to improve the system, particularly since recipients of food stamps and WICK vouchers for Women and Infants are already exempt from sales tax.

“When you look at replacing a sales tax on food with a cigarette tax, you actually make the tax more regressive. What Bill Fox has shown is that you actually are increasing the tax substantially on poor people when you do that, because a vast number of people who either don’t pay sales tax on food today because of food stamps or who pay relatively small amounts of tax today are replacing that with a tax on cigarettes which is substantial.”

The U-T economist says a tax swap would fail to help about a million poor Tennesseans

Sales tax contributes more than half of the revenue to keep state government working.