Grocery tax repeal passes Senate, goes back to House to concur

A repeal of Idaho’s sales tax on grocery food passed the Senate on a vote of 25-10 Wednesday but still needs House signoff and faces opposition from Gov. Butch Otter.

The tax bill is one of the last major pieces of legislation before lawmakers, who are set to adjourn for the year Friday. That gives the House two days to act on it.

The repeal bill started out as an income tax cut in the House, where it passed. The Senate amended it wholesale to substitute the income tax cut with the grocery tax repeal.

The House needs to concur with the Senate version of the bill. To do so, the Republican House majority might have to follow the lead of their Senate colleagues and go against leadership, which has backed the income tax cut.

Idaho issues an annual grocery tax credit to offset the sales tax assessed on food. The Senate-amended bill does away with both the credit and the tax, with a staggered implementation that delays the financial impact for one year.

The governor, in a March 16 letter to legislative leaders, said the elimination of both would have a close to $50 million hit on state revenue and said removing food tax “destabilizes the revenue stream.”

“I see no reason to change our current system and I oppose efforts to do so,” the governor wrote.

This story was originally published March 22, 2017 at 4:10 PM with the headline "Grocery tax repeal passes Senate, goes back to House to concur."