(The Center Square) – Knoxville voters will have the final say in a half-cent sales tax increase in November after getting the green light from the Knoxville City Council.
Knoxville Mayor Indya Kincannon proposed the sales tax. Part of the projected $47 million would be used to pave 75 miles of streets and to add new sidewalks near schools. The plan includes $10 million to ease what Kincannon called an affordable housing crisis in the city.
Tennessee’s state sales tax is 7%. The law allows counties and municipalities to charge an additional sales tax of up to 2.75%. Knoxville’s sales tax has remained at 2.25% since 1989, according to the Tennessee Department of Revenue local sales tax map. Knoxville’s neighbors – Anderson, Blount, Sevier, Jefferson and Grainger counties – have increased local sales tax rates to the maximum of 2.75%.
Groceries would be exempt from the tax increase.
“I encourage everyone to read the details of the five-year plan,” Kincannon said. “They’ll see that these neighborhood investments are both strategic and even-handed in adding quality-of-life amenities to all neighborhoods.”
Knoxville is Tennessee’s third-largest city. The tax increase would put the city on par with Memphis and Nashville, which added a 0.5% local option transit surcharge to raise that city’s sales tax to 2.75%. Chattanooga, which is fourth behind Knoxville in population, has a sales tax rate of 2.5%.
The Volunteer State’s combined sales tax rate is the second highest in the country at 9.56%, according to the Tax Foundation. Shoppers pay lower state sales taxes on food – 4%.
Tennessee does not have an income tax.
