A new legislative proposal aimed at phasing out the state income tax, reducing the grocery tax, and increasing sales and gasoline taxes has successfully passed through the House of Representatives with strong bipartisan support.

The measure, known as House Bill 1, was primarily sponsored by Republican Rep. Trey Lamar from Senatobia, and it sailed through with a vote of 88-24, with dissent only from Democratic members. The bill is now headed to the Senate for further scrutiny.

Notably, nine Democrats supported the initiative alongside their Republican colleagues, while seven others voted “present,” indicating they abstained from expressing a firm position. House Speaker Jason White remarked on the unified Republican stance, reflecting the bill’s importance to both lawmakers and their constituents. He expressed optimism about the bill’s prospects in the Senate.

This proposed legislation is designed to gradually reduce the current state income tax, which sits at 4%, to 3% next year, followed by annual reductions of 0.3% until it is completely eradicated within the next decade. Supporters believe that economic growth would compensate for the estimated $1.1 billion loss in revenue from the state’s total general fund, which amounts to $7 billion, without severely affecting government services. However, critics caution that such significant tax cuts should be approached with care in a potentially unstable economy, raising concerns about a shift towards regressive taxation that may disproportionately affect low-income residents.

In addition, the bill proposes a new 1.5% sales tax to fund local government initiatives, unless municipalities choose to opt out, effectively raising the state’s total sales tax rate from 7% to 8.5%. Furthermore, it aims to lower the tax on unprepared food from 7% to 2.5% over the next ten years, though a local sales tax will still be imposed, resulting in a net grocery tax of 4% once the plan is fully implemented. The revenue generated through county sales taxes would be allocated for local road infrastructure.

Some Democratic leaders, including House Minority Leader Robert Johnson III, voiced concerns about the bill’s lack of adequate protections for state funding and its potential adverse effects on lower-income citizens. Johnson stated that the proposed taxes would unfairly burden working-class individuals. An amendment proposed by Democratic Rep. Omeria Scott to immediately cut the grocery tax rather than implement a gradual reduction was rejected by Republican lawmakers.

The legislation also introduces a 5% gasoline tax meant to enhance funding for the Mississippi Department of Transportation, projected to generate around $400 million per year. Currently, Mississippi enforces a flat tax of 18.4 cents per gallon for gasoline regardless of market price. Transportation officials have argued for an indexed tax that would adjust with fuel prices to ensure sufficient funding for road maintenance.

With the average price of gasoline in Mississippi estimated at $2.62 per gallon, this new tax would result in an additional 13 cents per gallon for consumers. Mississippi’s Central District transportation commissioner Willie Simmons, alongside the executive director of the Mississippi Department of Transportation, Brad White, expressed appreciation for the House leadership’s engagement on infrastructure funding issues, though they did not explicitly endorse the current legislation.

Both Speaker White and Rep. Lamar have indicated that they believe Republican Governor Tate Reeves is in favor of the tax reduction plan, although the governor’s office has not issued a formal response. Reeves has historically opposed tax “swaps,” which involve raising one tax while reducing another, and has been critical of previous initiatives aimed at increasing the gasoline tax.

In 2021, Reeves notably rejected a proposal from Lamar and former House Speaker Philip Gunn aimed at abolishing the income tax while reducing the grocery tax by 50%, instead raising the sales tax on various items. “I wouldn’t want to be a Republican that votes to increase taxes substantially for certain segments of the public,” Reeves commented at the time, emphasizing his preference for broad tax cuts over selective increases.

Before the proposal can move forward, it must gain approval from the majority-Republican Senate, which has previously taken a more cautious approach to tax reduction plans without fully eliminating the income tax. Last year, both chambers approved a significant tax cut that is still in the process of being phased in.

Republican Lt. Gov. Delbert Hosemann has already expressed his intention to introduce legislation that would immediately lower the grocery tax from 7% to 5%, along with reducing the income tax by 1% over the next four years. However, no such bill has been introduced yet. Speaker White indicated his openness to negotiating with Senate leaders on tax reform, reiterating his ultimate objective of abolishing the income tax entirely.