Sales Tax hike to fund transit plan will make Nashville the city with the highest sales tax rate in the nation.

Mayor Barry is busy drumming up support for her mass transit plan.  She is urging supporters to sign petitions pledging support for the funding of mass transit.  Yesterday she confirmed that an increase to sales tax in Nashville would probably be part of the revenue sources required to fund the plan. In May a referendum will be presented to the public which will almost certainly include a proposal to raise the sales tax.

The combined state and local sales tax in Davidson County is currently 9.25 percent,  7 percent being  the state sales tax and 2.25 percent the local portion. Nashville has the ability to raise the local portion by another .5 for any reason.  The IMPROVE Act, which was primarily the gas tax increase that the State legislature passed recently, also included a provision that said cities could add an additional sales tax of up to 2.25 percent specifically to fund mass transit. If we raise the sales tax the .5% and the 2.25% that will produce a sales tax of 12%. 

At a  twelve percent sales tax rate, Nashville will be tied with Lake Province, LA as the city with the highest sales tax rate in the nation. There are only 21 cities in the nation with a sales tax rate of 11% or higher and most are small cities in Louisiana and Arkansas. (link)  

The Tennessean covered Barry's statement that funding for transit would likely include a sales tax increase but did not report that that would make Nashville the city with the highest sales tax rate in the nation.

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