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Grocery tax proposals face uphill battle in Legislature

Grocery tax proposals face uphill battle in Legislature

Idaho Freedom Foundation staff
February 26, 2014
[post_thumbnail] Sen. Cliff Bayer, R-Boise, has proposed some changes to the way grocery tax collections are handled.

Two different proposals have emerged this legislative session for how to alter Idaho’s tax on groceries and the state’s tax credit. Neither appear to have much of a chance of making their way to the governor’s desk for his consideration.

While one proposal to eliminate portions of the grocery tax credit appears to be stalled, a plan to completely eliminate all of the grocery tax credit and then eventually eliminate the state’s tax on food altogether remains viable, but facing an uncertain path forward.

“The chances of anything happening with it this year are diminishing,” said Speaker of the House Scott Bedke, R-Oakley. He spoke with IdahoReporter.com about the proposal he unveiled last month to eliminate the grocery tax credit for middle and upper income earners.

Under current law, Idahoans generally can claim up to $100 per year in a credit against the taxes they pay on groceries, while elderly residents can claim up to $120 a year. Bedke’s plan would lower state income tax rates and use the revenue that the state would retain with the elimination of the tax credit to offset the prospective loss in revenues to the state with the reduced income tax.

In the Senate, however, a different plan is brewing. A legislative proposal from Sen. Cliff Bayer, R-Boise, seeks to eliminate the state’s grocery tax credit, but then to eventually eliminate the state’s tax on food sales altogether.

Bayer explained to IdahoReporter.com that Idaho taxes food purchases at the sales tax rate of 6 percent. However, the state does not levy the tax on food acquired with the federal food stamps. He added that, like Idaho, Hawaii, Kansas and Oklahoma levy a tax on food purchases, but provide various sorts of exemptions and credits for certain purchasers.

IdahoReporter.com spoke with Bayer about his proposal and asked if the terms “grocery” and “food” should rightly be used interchangeably as they pertain to state policy.

“They are used that way and they probably shouldn’t be,” he stated. “My bill seeks to clarify this, in as much as we’re seeking to eliminate Idaho’s state tax on food as food is defined by the federal Supplemental Nutritional Assistance Program (SNAP, otherwise known as the federal government’s food stamp program).

In making his appeal for lower income tax rates last month, Bedke raised concerns about how Idaho’s income tax rates compare with those neighboring states. Yet when it comes to taxes on food and groceries, the comparisons between Idaho and its neighboring states paint an interesting picture as well.

Montana and Oregon have no sales tax at all. Utah has a sales tax, but reduces the tax for food sales. The other three neighboring states—Washington, Nevada, and Wyoming—impose some sales tax of one sort or another, but exempt food from the tax.

Bayer’s proposal has been assigned to the House Revenue and Taxation Committee, but it has yet to be reviewed. While the work of that committee was disrupted last week when Rep. Gary Collins, R-Nampa, committee chair, was ill, he returned to the Legislature this week.

Sen. Jeff Siddoway, R-Terreton, chair of the Senate Local Government and Taxation Committee, says that even if Bayer’s bill passes in the House he will not give it a hearing in his committee. “I have no interest in cutting any taxes until we better fund our schools,” he told IdahoReporter.com.

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