It’s been fascinating over the years to see Idaho families consistently ask for grocery tax relief only to encounter a barrage of falsehoods and unsubstantiated claims from lawmakers who think they know better. Here are a few of the most egregious bogies offered up, contrasted with the reality of how it works:

Claim: The grocery tax is good because it allows Idaho to collect taxes from out-of-state tourists.

Reality: The claim is never backed up with numbers, but it’s not very reasonable to think tourists are buying tons of groceries. Also, we should not support a shoddy tax policy burdening all Idahoans for the mere purpose of collecting some small amount of money from tourists. Certainly, there are better ways to target tourists if that’s the Legislature’s desire — might as well put tax booths at the borders. Finally, we should not support taxes for the mere purpose of extracting dollars from tourists. Wouldn’t it be better for Idaho if tourists spent their dollars on Idaho business and not on Idaho government?

Claim: Repealing the grocery tax will just make it so grocery stores can raise their prices by 6%.

Reality: No economic theory has ever suggested that removing a tax on a good will cause its price to go up. Instead, it’s just the opposite; competition keeps prices at their lowest levels. For example, if Idaho repealed its tax on gasoline (32 cents per gallon), does anyone think the price would not immediately drop by nearly 32 cents per gallon? It’s called competition. Idaho grocery stores are making a profit now, and get nothing from the grocery tax. A store raising its price after the tax goes away, would risk losing business to other stores that didn’t raise prices. And, here’s the best part for the stores; customers with 6% more purchasing power will increase grocery store profits, without any changes in prices.  

Claim: The grocery tax is most fair because everyone pays it.

Reality: Not everyone pays it. Those on food stamps (SNAP program) pay no sales taxes on groceries. Those who live near state borders avoid the tax but still enjoy the tax credit. Idahoans from the western edge of the state, in Fruitland, often cross into Oregon to get tax-free groceries but still get the full credit on their income taxes. Also, because poor and near-poor families pay a larger portion of their incomes on groceries than wealthier families, the tax on groceries disproportionately hurts the lower-income families. This is the unfair burden of a regressive grocery tax.

Claim: The sales tax is important to maintain because it provides stable tax collections to government compared to other taxes.

Reality: The grocery tax is only a tiny fraction of Idaho tax collections. Of all the sales tax collections, only about 11% comes from groceries, and sales taxes overall only represent a fraction of Idaho government tax collections. The $350 million in grocery taxes (projected for FY2025) amounts to only 4.0% of the state budget, and only 2.5% of all government collections/spending in Idaho — hardly an offset for a volatile economy. Even so, it doesn’t seem fair to construct a tax system that maintains a higher burden on families in hard economic times just to shield government from economic pain. Government should feel the effects of economic downturns, too.

Claim: Repealing the sales tax on groceries would cost too much.

Reality: Let’s be clear, when government spends tax dollars, those are costs. But, when government reduces taxes, those are not costs, those are savings (for families). Second, as mentioned above, the estimate of $350 million in reduced tax collections is not a big chunk of Idaho’s government budget. It’s only 4% of the state spending. And that doesn’t even account for the dynamics of how lower tax rates change incentives. Removing the tax on groceries would mean fewer Idaho residents would cross the border to buy groceries. More grocery stores in Idaho would thrive (more income taxes, too). Idahoans would have 6% of their grocery expenses still in their pockets to spend elsewhere. Those dollars would lead to more economic activity and more tax collections in other parts of the budget. The “cost” to the budget will undoubtedly be lower than static estimates suggest.

Claim: Idaho’s grocery tax system has worked for decades, and it’s just fine.

Reality: If Idaho’s grocery tax was so brilliant, we wouldn’t see 38 other states with zero taxes on groceries (plus two more in the works), including five of our bordering states, with the sixth at a very reduced tax rate. Maybe Idaho needs to catch up to other states in protecting families from undue tax burdens instead of spinning false narratives.

Claim: Repealing the sales tax on groceries would be difficult for Idaho grocery stores to administer.

Reality: Idaho grocers already deal with grocery tax exemptions for Idahoans on food stamps. It’s factored into their computer systems and easily excluded for qualified grocery purchases. Idaho’s grocery tax repeal proposal uses the same definitions for qualifying groceries as the food stamp recipients. And remember, 38 states collect zero taxes on groceries (plus two more in the works), and they are able to easily manage their systems and collections on non-grocery items.

Idaho Freedom Foundation President Ronald Nate lays out the case for grocery tax repeal in this article.