Of all the public policies that enjoy wide support at the Idaho Statehouse, one idea has received consistent bipartisan love through the years: a plan to eliminate the sales tax on groceries.
Since 1965, when the state’s sales tax was first implemented, at three percent, the state has taxed food purchased at the grocery store. Today, the tax is 6 percent. The money collected doesn’t fund schools. It doesn’t fund health care programs. It doesn’t pay for parks, police or prisons. No, the tax on groceries is collected, held by the state tax commission, then refunded to you -- $100 for each taxpayer and $100 for each child. Seniors get a bit more.
The policy makes little sense. It temporarily removes about $150 million from the economy for no reason whatsoever. People who don’t owe income taxes are forced to file to collect their share of the grocery tax, which annually costs the government -- read We the People -- about $1 million just to process the paperwork. Periodically, the tax commission will require taxpayers to prove they’re really residents of Idaho and thus entitled to receive the rebate.
The tax also creates problems -- including potential job losses -- for Idaho’s border communities. Oregon and Washington are like most states; they don’t tax groceries as Idaho does. This results in stores opening on the other side of the state line instead of in Fruitland, Lewiston, Moscow and other Gem State towns.
In 2001, Republicans and Democrats co-sponsored a bill to get rid of the tax on groceries. The bill was sponsored by conservatives like Rep. Bill Sali, moderates such as Rep. George Eskridge, and liberals like Rep. Roger Chase. Reps. Scott Bedke and Mike Moyle, today the House Speaker and House Majority Leader, respectively, also backed the legislation, which passed the House with only one vote against it. But, the bill failed to get a hearing in the Senate.
In 2015, eliminating the tax on groceries was included in a plan to lower the income tax rate and increase gasoline taxes. The measure passed the House, but was denied a vote on the floor of the Senate.
Today, eliminating the tax on groceries still has wide support among lawmakers. Legislators often tell me they consider it one of the most important tax policy changes Idaho should make, because it would provide instant relief to individuals and families. Eliminating the grocery sales tax ranks right up there with lowering the state’s income tax rate and eliminating personal property taxes.
But, this session, no assurances have been made that such a grocery tax proposal will be granted a hearing in the House Revenue and Taxation Committee. Some lawmakers think a grocery tax repeal bill won’t even be introduced because, though popular, it doesn't have support from key members of the Legislature.
Several years ago, Bedke proudly proclaimed that the Legislature is “an arena of ideas.” Indeed, it’s a place where 105 people from all walks of life and all parts of Idaho come together and present various ideas that they think will help make Idaho a better place to live and work. One of those ideas happens to be the elimination of the sales tax on groceries, which would help Idaho families keep more of their own money and be able to better afford the food they need to live. The Legislature should at least have a debate on the merits of the proposal. What harm is there in having a discussion?