Tennessee Takes Heat for Proposing Tax on Free Breakfast

by Hanna Raskin, Posted Mar 18th 2010 @ 11:00AM

The lukewarm coffee and stale bagels that mid-priced hotels tout as "continental breakfast" have fueled a tax firestorm in Tennessee.

Tennessee hoteliers have united in opposition to a new proposal to collect tax on the food they purchase for their free breakfasts. The state maintains the proposal is intended to counteract a legal decision that made Tennessee an "anomaly" by creating a sales tax exemption for hotels.

"Tennessee is not seeking to do anything groundbreaking or revolutionary," Department of Revenue commissioner Reagan Farr says.

According to Farr, Tennessee could generate as much as $10 million annually by tagging hotel buffet-bound items with a tax determined by county ordinances; the maximum rate is 9.75 percent.

Farr is certain few hotels would pass the new fee on to their customers: "The sales tax on a bowl of Cheerios is not going to have that much impact," he insists. But associating the words "tax" and "free," is a sure way to rile up anti-government types, as Farr discovered when Rush Limbaugh mocked the plan on-air last week.

"What kind of idiots are these people?," Limbaugh scowled, questioning the proposal's constitutionality. "You can give anybody $13,000 a year tax-free. You can."

Limbaugh concluded that even the most voracious guest was unlikely to consume more than $13,000 of muffins and instant oatmeal over the course of a year.

"My frustration with the reaction to this proposal is individuals like Rush Limbaugh get on their soapbox and start talking about things they don't understand," Farr says. "He never even called me. This is really a case of a sexy headline."

The Tennessee Hospitality Association, whose executive director characterized the plan as "bullying", didn't return numerous calls seeking comment.

"People aren't letting a lack of facts stand in the way of a strong opinion," Farr says.

Filed Under: Food Politics, News
Tags: department of revenue, tax on breakfast, tennessee hospitality association, tennessee hotel tax

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Reader comments (Page 1 of 1)

3-18-2010 @12:17PM LinC said... Why would they tax for the breakfast and not tax for the swimming pool? It makes no sense. Sounds like Tennessee just wants the hotels to stop serving bagels so they can get more breakfast restaurant business. Totally ignorant.
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3-18-2010 @5:15PM WRN said... TAX ON FOOD. That is the final straw that will outrage every American. What next? Tax on air? The "people" running this country are amoral. Reagan Farr should hang his head in shame. There is a special place in hell for people like him.
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3-18-2010 @6:19PM ben said... we do pay taqx on food here in tennessee, depends on the sugar content and the readiness of it as to what the tax is.

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3-18-2010 @6:50PM Barbara said... Here in TN we have nearly 10% sales tax on everything, but food is only 8.5%, I think. Entertainment tax (hotels, touristy things) is really really high, but we have no state income tax. I like no state income tax, but our roads and schools really are the pits.

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3-18-2010 @5:06PM glenn said... This 'TAX' business is getting way out of hand. If the taxes were going to the people of this country, then that might make a little sense. But paying taxes to give to the rest of the world and our 'scumbag politicians' makes no sense at all. When is it going to stop? When is a politition going to say..."enough is enough." We have destroyed this country and things have to change. Close our borders, cut off welfare to all illegals, and say 'If it is not made here, it is not sold here.' And then tell the rest of the world; 'You are on your own." It is so very simple. If the polititions of this country actually cared about the people, this would be done. NOW!
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3-18-2010 @6:43PM Hypocrite Pachyderm Turnabout said... Glenn,
2 years ago, you would have been called a lousy "isolationist democrat", But now, coupled to your anti-tax rant, you'd be put on the no-new-taxes GOP pedestal.

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3-18-2010 @5:06PM Andy said... As if stuff doesn't already cost a lot.
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3-18-2010 @6:51PM phil said... I live in TN and pay sales tax (9.25%) on the food that I buy to consume, so why shouldn't H/Motels pay the tax on food they buy to consume? They don't have to pay the tax on food that's sold in their restaurants except as a pass- through of the tax collected from their customers, only on the food they give away.
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3-19-2010 @8:19AM LinC said... The hotel has already paid the tax on the raw food materials to make the breakfast. TN is already getting a hefty room tax from the person staying at the hotel, but they seem to think that they need a THIRD tax just because the hotel choses to give away breakfast.

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3-18-2010 @6:42PM mark turner said... Limbaugh is not my favorite radio host (that would be Neal Boortz- check him out if you are not a Liberal drone) but the tax IS an outrage.
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3-18-2010 @6:48PM No stinky cheese! said... If you republican drones would say that a little louder about Rush Limburger, he'd disappear.
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3-18-2010 @7:56PM hiker2010 said... You're an idiot if you think Limbaugh will disappear!

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3-18-2010 @6:59PM phil said... You have the power to vote for the polititions who make these decisions. Also, if it is not made here but sold here you have the power to not buy it.
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3-18-2010 @7:08PM Angiebaby said... First of all, we don't get no damn FREE breakfast at hotels. When you pay $198 dollars, plus state, federal and local taxes, per night for a room with a commode, a tv and a bed, which should cost all of $68 bucks a night, we're paying for that food we get. And I might as well point out that those "complimentary" towels by the pool are costing you a pretty penny, too. Those cookies in the lobby at night? They come from a role of dough costing $1.39 at the Walmart, but we're averaging paying $8 buck a piece for them in hidden charges.

And after reading Department of Revenue commissioner Reagan Farr's comment about very few hotels passing on the charges to guests leads me to believe he definitely falls somewhere on the less astute end of the Autism Spectrum. Please. I don't care what you call it, we get nothing FREE during our hotel stays. Zero. Zip. Nada.
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