Fulcher, Bayer propose repeal of Idaho grocery tax

But election-year politics add a hurdle for Gov. Otter’s challenger.

dpopkey@idahostatesman.comFebruary 11, 2014 

  • Grocery tax facts

    Of the 45 states with sales taxes, 32 don’t tax groceries. Six states tax groceries at a lower rate.

    Four states — Idaho, Hawaii, Kansas and Oklahoma — collect the tax, but offer an annual rebate.

    Just three states tax groceries at the full rate without a rebate: Alabama, Mississippi and South Dakota.

    The Fulcher-Bayer bill would follow federal food stamp guidelines on what foods would be exempt from the 6 percent sales tax: bread and cereals; fruits and vegetables; meats, fish and poultry; dairy; and seeds for the production of homegrown food. “Junk food,” including soft drinks and candy, also would be exempt, as would “luxury” foods including steak, seafood and bakery cakes.

    Tax would still be collected on beer, wine, liquor, tobacco, pet food, soap, paper products, household supplies, vitamins and medicine. Foods eaten in the store and hot prepared foods also would be taxed.

Sens. Russ Fulcher and Cliff Bayer have drafted a bill to exempt food from Idaho’s 6 percent sales tax, saying that’s better policy than the grocery tax credit they helped enact in 2008.

“We really don’t think there should be a tax on food,” said Fulcher, R-Meridian, who started working with Bayer on the issue in 2006 when they represented the same southwest Ada County legislative district, Bayer in the House and Fulcher in the Senate.

“There’s a fairness issue,” said Bayer, R-Boise, noting that 32 states don’t tax groceries. “It’s a necessity.”

Their measure would be effective July 1, 2016. Currently, senior citizens and the poor get $120 and $100 annual grocery tax credits, respectively. For other taxpayers, the current $80 per person credit will reach a $100 cap in 2015. Repealing the sales tax on food would cut state revenues $172 million in fiscal 2017, Bayer said, but would be offset by repealing the tax credit. The net cost to the state is estimated at $26 million, he said.

Bayer and Fulcher said they have more than two dozen co-sponsors from both parties and planned to get the bill introduced this week.

But the absence of House Revenue & Taxation Committee Chairman Gary Collins — he was to have his spleen removed Monday and miss the entire week — means that’s unlikely.

A further complication: Fulcher’s challenge to Gov. Butch Otter makes supporters of the governor resistant to hand the upstart a campaign issue.

“I am not supportive of Senator Fulcher’s and Senator Bayer’s idea,” House Speaker Scott Bedke said Monday. “I’m not a fan.”

Early in the session, Bedke, R-Oakley, proposed shifting $70 million or $80 million from the grocery credit claimed by middle- and upper-income Idahoans to lower tax rates on personal and corporate income. He dropped the idea after being convinced it was regressive.

Now, Bedke won’t rule out blocking the Fulcher-Bayer bill from even getting introduced.

“We’ll see,” Bedke said when asked whether his opposition was strong enough to ask Collins to decline to schedule the bill for a print hearing.

House Majority Leader Mike Moyle, R-Star, another Otter supporter and influential member of the tax committee, said he couldn’t comment fully until he saw the bill.

But Moyle raised an objection about Fulcher’s timing, coming 13 weeks before the May 20 primary but more than two years before the effective date. “So we pass legislation now that doesn’t take effect for two years?” he said. “You got two years to worry about it.”

The idea also met with skepticism from Senate Local Government & Taxation Committee Chairman Jeff Siddoway, who said he learned of the measure Monday when asked about it by a Statesman reporter.

“That’s a good thing,” said Siddoway. “Keep the chairman in the dark.”

Siddoway said he would oppose repeal of the tax on groceries and prefers full repeal of the administratively complex tax on personal property, except for utilities. That would cost about $90 million.

“We’re looking for stability in our tax policy,” said Siddoway, R-Terreton.

Fulcher acknowledged his bill will be seen through a campaign lens, but said it is not motivated by his bid to unseat Otter.

“The bottom line is, the way it is right now, it’s a juicy bucket of money that is a continual temptation to raid, a la what Speaker Bedke was talking about,” Fulcher said. “We find ourselves in this situation it seems like every legislative year. That’s why we did what we did.”

Otter spokesman Jon Hanian said the governor had no comment on the proposal, his typical stance on pending legislation.

Bayer said Democratic co-sponsors include House Assistant Minority Leader Grant Burgoyne, of Boise, and Sen. Roy Lacey, of Pocatello, both tax committee members.

But House Minority Leader John Rusche, D-Lewiston, is cool to the idea. “I’m not sure that’s the best way to improve the status of Idaho citizens,” he said.

Dan Popkey: 377-6438, Twitter: @IDS_politics

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