(Story courtesy of WVLT News)
KNOXVILLE, Tenn. (WVLT) – Knoxville Mayor Indya Kincannon wants Knoxville voters to increase sales tax in November, saying the city plans to use the extra funding to pay for things like affordable housing, road improvements and parks.
The mayor made the announcement Thursday. She said she planned to propose a vote in November that would max out the city’s local option sales tax, an increase of 0.5%. That means everything, minus a few key exceptions, will cost 0.5% more within city limits.
What is a Local Option Sales Tax?
Tennessee charges a 7% sales tax across the state. Local municipalities, like cities, are allowed to charge their own sales tax on top of that 7%; right now, Knoxville charges another 2.25%. The increase would put the city’s rate at 2.75% and the total at 9.75%.
The City of Knoxville last increased its local option sales tax in 1988.
What’s being excluded?
Kincannon is excluding groceries, rent, utilities, gas, prescriptions, bus fare and healthcare visits from her proposed tax increase. Those sales tax rates will stay the same, even if the increase passes.
Who decides?
First, the Knoxville City Council will be voting to put the increase on the November ballot. That vote is expected to come in June.
If it passes, the increase will be up to city voters only. Those who live in Knox County, but not Knoxville, will not vote on the increase.
A simple majority passes the increase— 50% plus one vote.
How does Knoxville’s current tax rate stack up to our East Tennessee neighbors?
Plenty of other counties in East Tennessee max out the local option for sales tax. For example, Anderson, Grainger, Jefferson, Sevier and Blount counties all charge the full 2.75%.
What will the money be used for?
City data claims the increase would raise $47 million annually. The city hasn’t released a list of projects yet, but city representatives did provide a breakdown of what types of projects that $47 million will go towards:
- Affordable Housing: $10,000,000
- Greenways and Roads: $12,000,000
- Parks: $10,000,000
- Facilities and Maintenance: $5,000,000
- Sidewalks and Traffic Calming: $10,000,000
