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Tennessee Gov. Haslam plan calls for 7-cent gas tax hike, cuts to grocery sales tax 1/18/2017

01/18/2017, The Tennessean – Gov. Bill Haslam is pushing a 7-cent hike in the state’s gas tax, new fees on electric vehicles and rental cars and an end to being able to have an open container of alcohol in a car as part of an overall package aimed at tackling a $10 billion backlog of road projects that have been waiting for funding.

The plan, which is officially known as the Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy or IMPROVE Act, also calls for slashing the state’s sales tax on groceries by another half percent, $113 million in cuts to the state’s business taxes, as well making additional cuts to the Hall Income Tax.

Flanked by mayors from across Tennessee, as well as a handful of business leaders, Haslam unveiled his plan on Wednesday, which calls for the first gas tax increase since 1989.

“Everybody in here is concerned that Tennessee is the type of place that attracts great jobs. We can’t be in a situation where we’re at a competitive disadvantage,” Haslam said.

The Plan

Under Haslam’s proposed plan, Tennesseans would begin to pay an additional 7 cents per gallon on gasoline and 12 cents per gallon on diesel beginning in July.

The dual gas tax increases would net the state’s Department of Transportation an additional $227.8 million, with cities receiving about $39 million and counties another $78 million.