Two Idaho state senators will try to repeal the state’s tax on groceries and have nearly finished legislation to get there.
Boise Sens. Cliff Bayer, a Republican, and Grant Burgoyne, a Democrat, told IdahoReporter.com Wednesday they are polishing legislation they hope will receive serious consideration this year.
“I’ve always been in favor of ending the taxes on people’s groceries,” Burgoyne said Wednesday.
Bayer said the idea makes sense because it will likely aid economic growth in the Gem State.
“This is an economic development and jobs bill,” Bayer said, “as much as it is good tax policy.”
It’s Bayer’s second try at repealing Idaho’s 6 percent tax on food. Speaker of the House Scott Bedke, R-Oakley derailed Bayer’s first bid, launched last year. Bedke blocked Bayer’s bill, which he wrote with former Sen. Russ Fulcher, R-Meridian, from being heard in committee.
Bedke offered an alternative plan, which would have eliminated the rebate the state pays to residents annually and used those funds to lower top income tax rates. Bedke’s plan failed.
Bayer’s plan would eliminate the rebate and cut an additional $26 million in taxes, reducing the burden on families and giving them more buying power at the supermarket or corner store.
While Bayer is confident in his estimates about the overall reduction to state revenues, he cannot account for the good he believes the plan could do. With no taxes on food, he believes grocers may consider locating in towns bordering Washington, Montana or Oregon, states that don’t tax food.
“It’s not worth it if they can’t be competitive,” Bayer said.
He also said his plan might mean higher sales of food that will remain taxed under the plan -- paper towels, for example -- in Idaho stores because residents won’t try to save by avoiding the grocery tax.
“People may be less inclined to make a separate trip for some taxed goods,” Bayer said.
Bayer said he’ll finish up the package this week and submit the plan to House Revenue and Taxation Committee Chair Gary Collins, R-Nampa. The senator doesn’t have a feel for Collins’ reaction to the plan.
Several tax proposals are under scrutiny in the offices and cubicles in the Idaho Capitol. Gov. Butch Otter suggested lawmakers consider again a small drop in top income tax rates, while other plans seek a flat rate for all payers.
A hike in gas and registration fees could complicate matters, as lawmakers typically reticent to raise taxes seek to control the optics and message of any potential deals. Bayer told IdahoReporter.com giving Idahoans “a break at the register” could do the trick.
Bayer’s proposal may not gain traction in the House, though. House Majority Leader Mike Moyle, R-Star, told IdahoReporter.com earlier this year that the levy on food captures dollars from the so-called underground economy: undocumented immigrants who don’t pay income taxes.
He also objected to the plan because the rebate system allows the state to capture taxes from tourists who buy groceries but aren’t entitled to a credit.
Still, the idea has won support of the Idaho Freedom Foundation and at least two of the state’s major newspapers. “Eliminating the tax altogether would keep that money in shoppers' pockets, and with stagnant Idaho wage increases generally being outpaced by inflation on food, every penny saved counts,” the Coeur d’Alene Press wrote in January.
Canyon County’s Idaho Press Tribune questions the efficiency of Idaho’s grocery tax rebate, which holds taxpayer money hostage every year. “Why should you have to wait a year to get back your tax on groceries?” the paper questioned two months ago. “How about simply not paying it at all?”
Note: The Idaho Freedom Foundation publishes IdahoReporter.com. Fulcher, who left office last year, is now a member of the foundation’s oversight board.