Removing grocery sales tax and credits is good for everyone

Please encourage Gov. Butch Otter to sign House Bill 67 to remove sales taxes on groceries, a system that hurts families. Taxing food, a basic human need, is unfair. Idaho is one of only 13 states that does so.

Let’s liberate Idahoans and the Tax Commission from the cumbersome sales tax on groceries with tax credits paid back months later, a system that no longer makes sense. That’s why HB 67 passed the House and Senate with strong bipartisan support.

For Idaho to tax groceries generating paperwork to return some of these dollars to citizens later doesn’t make sense. Data given to legislators revealed that a typical family of four is spending $7,600 annually for groceries, not the $6,600 estimated. Families with teenagers likely are spending even more. Most families don’t receive parity with a delayed annual tax credit. These credits, available only once a year, do not keep up with cash flow for stressed Idahoans with tight monthly budgets.

Steve Ackerman, a College of Western Idaho economics instructor independently testifying to the House, said, “The grocery sales tax repeal would benefit Idahoans more than an income tax cut.” HB 67 truly helps lower income earners the most — having 6 percent more in your pocket when you need it is what matters.

Many disadvantaged people cannot readily access the tax credits. Sen. Cliff Bayer (sponsor, R-Meridian) also confirmed that 50,000 tax returns are filed annually solely to receive grocery credits. Let’s rid Idaho of this convoluted system and save the significant expense of processing 50,000 unnecessary returns.

Two economists recently stated concerns about supposed burdens on merchants who will stop taxing groceries but still impose tax on sundries. Today’s food stores use database systems that accommodate more complicated pricing options than a simple tax/do not tax “flag.” There’s ample time to get ready for system changeovers in fiscal year 2019.

Another unfortunate side effect of 6 percent sales tax: Idaho’s border town grocers suffer because folks drive out of state to avoid paying sales tax. HB 67 helps small business, especially in Weiser, Parma, Moscow and Coeur d’Alene. The Idaho Farmers Market Association reports that the Moscow Farmers Market alone has fostered 67 startup businesses with an economic impact of $3.45 million to $4.56 million. Ending grocery taxes will stabilize prices at local markets and decrease sellers’ remittance burdens.

Sen. Bayer worked diligently to craft this sales tax-credit removal, including a mechanism equalizing sales tax revenue to local governments, and he delayed implementation for one year. There is zero fiscal impact in fiscal year 2018. We urge this period be used to finally enact overdue tax loophole solutions. We also question why legislators allowed S1206, the roads bill, to siphon off 1 percent of all sales taxes for highway fixes, an unprecedented transfer of sales revenue largely intended to fund education.

Idahoans want this inequitable tax on groceries to vanish, along with the outdated credits, an unnecessary layer of bureaucracy. HB 67 is a timely move, especially with substantial new Amazon sales taxes entering the Idaho revenue stream this month. Folks everywhere are clear that our tax system needs change. Enacting HB 67 is a great step for more fairness and sensible government.

This story was originally published April 7, 2017 at 4:43 PM with the headline "Removing grocery sales tax and credits is good for everyone."