From a 3.5% to 3% deduction in sales tax on groceries filed at a council work session on Thursday, the ordinance was set to be voted on October 2 at a council meeting which will reportedly take effect on October 1, the next year if it passes all the legal proceedings.
Sales Tax On Groceries Recent Modifications
Councilman Casey Middlebrooks, the main author of the sales tax on groceries measure said that the city’s revenue has significantly improved in the previous years, the move, as he added, intends to give back to its community following the inflation that impacted many families.
Based on a study, the sales tax on groceries reduction will cost the city about $1.67 million in fiscal 2025. The study further revealed that spending on groceries in the city will peak at $334 million in 2025, that’s $3,531 per resident, expecting a 4% inflation rate.
Currently, looking at the city sales tax on groceries at 3.5%, it is expected to generate about $11.7 million in tax revenue in 2025, while lowering the sales tax on groceries at 3% would generate about $10 million. However, there’s no assurance that people would spend some of their tax savings buying more groceries or other retail items which will negatively impact the tax revenues at less than $1.67 million.
Sales Tax On Groceries Previous Modifications
Amendments in sales tax on groceries last happened in October 2018, an increase from 3% to 3.5%, putting the overall sales and use tax rate at 8.5% in Shelby County and 9.5% in Jefferson County. According to records, the amount of revenue the city receives from all kinds of sales and use taxes rose from $60.5 million in fiscal 2012 to $106 million in fiscal 2022. City officials fully hope to have that dollar amount exceed this fiscal year which shall end on September 30.