Ending the sales tax on food is probably a good idea to ease the burden on the poor and to make our border communities competitive with their tax-free competitors. But what Idaho needs is a top-to-bottom review of its taxes and its myriad outdated sales tax exemptions, not a last-week-of-the-Legislature piecemeal approach.
We urge Gov. Butch Otter to veto the repeal the Legislature sent him and then work with legislative leaders to create a mechanism that can develop a broad review and rewrite. We share Otter’s concern about a potential loss of $80 million in revenue.
Tax reform may be one of the next big things Congress and President Donald Trump take up. It makes sense that Idaho undertake a parallel reform to simplify and lessen the burden on its citizens. That means a systematic, holistic look, not one taxable item at a time.
For many Idahoans, and members of our editorial board, tax simplification is tax reform. And this repeal would eliminate one credit meant to offset some of the burden the grocery tax puts on our citizens.
But eliminating that credit would hurt, not help, the neediest Idahoans. And would it make things simpler for small grocers, who will have to differentiate between qualified food items and other items at the checkout stand? Large grocers can easily reprogram these adjustments in computerized systems, but it won’t be a simple task for small businesses.
Otter’s primary concern with the repeal is the estimated annual revenue loss of $75 million to $80 million for state and local governments. That’s another legitimate concern and we’ve seen no supporting documentation on how the state would make that up. What would we give up to balance our budget?
The legislation would use the federal definition of food in the SNAP program. While that definition is clear about some things — no food products that contain alcohol or tobacco products and items not intended for human consumption (paper products, pet foods) — there is vagueness. Food sold hot, such as a rotisserie chicken, would be taxed. But what happens if that chicken doesn’t sell and then is repackaged as a cold item?
Other SNAP guidelines: “When considering the eligibility of vitamins and supplements, power bars, energy drinks and other branded products, the primary determinant is the type of product label chosen by the manufacturer to conform to Food and Drug Administration (FDA) guidelines: items that carry a nutrition facts label are eligible foods; items that carry a supplement facts label are classified by the FDA as supplements,and are therefore not eligible.”
So, if a manufacturer labels something food, does that mean it is? And how to keep track?
Rather than target the grocery tax exemption, we want our Legislature and Congress to tackle the multitude of exemptions and loopholes that cause us all to distrust our tax system and collectors. We are reminded of the confounding nature of the tax code as the deadline for federal and Idaho state taxes approaches: Tuesday, April 18.
We need a streamlined tax and comprehensive reform, and this repeal does not give us that.
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