How much do you spend per week on groceries? Is the proposed Idaho tax credit enough?
When was the last time you spent $38.46 on your weekly grocery shopping?
That’s what you’d need to keep your weekly food bill to if you want to max out on a proposed increase to Idaho’s food sales tax credit for an individual.
A family of four would need to keep their grocery bill to $154 per week. I don’t know many families of four who can get out of the grocery store for less than $154 — especially if you have two teenagers.
Idaho taxes food purchases with a 6% sales tax, the same rate as any other purchase in the state. Idaho is one of 13 states that impose a sales tax on groceries. To offset that tax, though, Idaho provides a tax credit of $100 per person, or $120 for seniors.
A bill that passed the Idaho House last week and now heads to the Senate would increase that credit from $100 to $120 for each individual and from $120 to $140 for seniors.
Granted, it would be an improvement.
Unfortunately, it’s not enough of an improvement.
A more realistic tax credit is $160 per person, according to the Idaho Center for Fiscal Policy.
That’s based on the much more realistic figure of $888 per month, or $205 per week, of grocery spending for a family of four. That amounts to $10,656 in annual spending on groceries.
“A family that’s spending $888 a month — which we think is more similar to what families realistically spend — they would pay $640 in grocery tax,” Alejandra Cerna Rios, director of the Idaho Center for Fiscal Policy, said in a Zoom interview. “So that means to fully offset that $640, the credit (per person) would need to be $160.”
The Idaho Legislature is just dancing around this issue and nickel-and-diming Idahoans.
In all, 37 states don’t tax food, and even among the states that do, they typically tax it at a lower rate.
Taxing groceries hurts lower-income Idahoans disproportionately, as food is a necessity that everyone has to buy. People with higher incomes are better able to pay that extra 6% on their grocery bill. In addition, those with higher incomes spend a relatively smaller portion of their income on food, but if you make very little, you’re getting taxed on a larger portion of your total income.
The tax credit offsets that burden at least partially. The less you spend on groceries, the more of your tax bill the credit pays for.
House Speaker Scott Bedke two years ago proposed a bill to increase the credit to $135 for every person.
That meant $540 for a family of four, which translated to about $9,000 in groceries per year without being taxed, or $173 per week. That would be better. It’s probably still not enough, especially after this week’s report that the consumer price index for January showed an inflation rate of 7.5%, the highest level in 40 years.
But legislators this year couldn’t even find a way to increase the tax credit to what was suggested two years ago, when things weren’t as dire at the checkout line and when the state didn’t have a $2 billion budget surplus.
Unfortunately, the Legislature now can’t even afford to increase the credit, after cutting $600 million from income taxes. Even increasing the credit to $120, at a cost of $32 million, can’t happen until next year and relies on money from online sales tax in 2023. So even if this does pass, Idahoans won’t get the credit until 2024.
“Idahoans need inflation relief, not $20 in two years,” Rep. John Gannon, D-Boise, said on the House floor opposing the bill.
To pay for a $160 credit, Cerna Rios suggested an income cap. Capping income eligibility at around $150,000 or $200,000 would keep as much as $50 million in the state coffers, enough to pay for an increase in the credit to $160 per person below that income limit, she said.
Meanwhile, the calls for complete repeal are growing.
“It’s time to suspend or simply repeal this grocery tax,” said Gannon, who joined a handful of Republicans in opposing the bill. “I hope this body decides to take real, meaningful action.”
By raising the credit by a measly $20 two years from now, this body clearly is not taking real, meaningful action.
