Tennessee Gov. Lee looking to combine grocery tax holiday, with professional privilege cut

Tennessee Gov. Bill Lee wants to pair a grocery sales tax holiday with a reduction in taxes for lawyers, lobbyists and investment advisers.

Lee released his updated budget plan Tuesday, which contained the proposal for a one-month sales tax holiday on groceries and a permanent reduction in the professional privilege tax from $400 per year to $300.

Republicans and the professional communities the tax targets have long sought to eliminate the privilege tax.

The tax applies to around 200,000 people working as lawyers, doctors, lobbyists, investment advisers and stockbrokers, according to a study released by the Tennessee General Assembly Fiscal Review Committee. About three-quarters of those who pay the yearly tax live out of state.

Lt. Gov Randy McNally, R-Oak Rid said he favored eliminating the tax, either all at once or over a period of time.

"It is very discriminatory in who it reaches," McNally said.

The Lee proposal would cost the state around $20 million per year, while a permanent cut would cost $80 million per year.

The state's sales tax rate for groceries stands at 4%, and local governments can add as much as 2.75%. The state has vowed to reimburse local governments during the sales tax holiday.

If implemented, the state would lose about $80 million in revenue, according to the Tennessee Department of Finance and Administration.

For consumers, if families spent $1,000 on groceries in a month, they would save as much as $67.50, depending on where they live.

House Majority Leader William Lamberth, R-Portland, said he favors the idea of cutting both.

"The grocery sales tax cut is about four to five times the provisional privilege tax cut, and that's exactly how it should be," Lamberth said.

More: Gov. Bill Lee to offer up $500 million for new Nashville Tennessee Titans stadium

More: Tennessee Gov. Bill Lee proposes 30-day grocery tax suspension amid 'historic' inflation

But, Lee's proposal is likely to change as lawmakers finalize his budget recommendations.

One idea floated by Republicans is to waive the vehicle registration tax cut for a year.

Senate Finance Chairman Bo Watson, R-Hixson, said his committee is looking at several other tax cuts to present in the coming weeks.

Adam Friedman is The Tennessean’s state government and politics reporter. Reach him by email at afriedman@tennessean.com.

Want to read more stories like this? A subscription to one of our Tennessee publications gets you unlimited access to all the latest politics news, plus newsletters, a personalized mobile experience and the ability to tap into stories, photos and videos from throughout the USA TODAY Network's daily sites.

This article originally appeared on Nashville Tennessean: Lee wants to combine grocery tax holiday with a tax cut for lobbyists