As a new fiscal year dawns Monday, Kansas will continue to compare unfavorably with its neighbors for its high sales-tax rate and with the 37 states that don’t have a sales tax on food. And as the income-tax cuts shrivel state revenues, legislators likely will need Kansans to keep paying sales tax on bread, milk, fruit and everything else on the grocery list.
How frustrating – and just when the past two legislative sessions found genuine interest in each chamber in eliminating or at least easing the food-tax burden for all Kansans.
The 2013 session ended early this month with an agreement that will let the sales tax drop to 6.15 percent Monday, rather than reverting to 5.7 percent as promised by the 2010 Legislature. But in May the Senate had voted unanimously to cut the sales tax on groceries to 4.95 percent starting in 2014. And in March 2012 the House voted to stop taxing groceries entirely. It was persuaded by the argument offered by then-Rep. Jana Goodman, R-Leavenworth, that “it’s kind of like taxing air. It just seems unfair to me to tax something people have to buy” – and undeterred by estimates that it could mean a fiscal hit of $300 million a year to the state.
Neither of those proposals made it to the finish line. In both years, the prevailing priority was funding some semblance of government services while slashing income taxes.
Worse, last year’s tax reform repealed a food sales-tax rebate program for the poorest Kansans, and a partial restoration approved this year is an income-tax credit available only to eligible households and newly nonrefundable. So it won’t benefit those too poor to owe income taxes.
True, paying 6.15 percent sales tax on food is better than paying the 6.3 percent rate that expires Sunday. But that’s no bargain considering the neighboring states either exempt food from sales tax (Nebraska, Colorado) or tax it at lower rates (Missouri, Oklahoma) – and the reality that many Kansans will still pay more than 8 percent sales tax Monday because of local levies.
And as she touted the progress being made toward Gov. Sam Brownback’s goal of eliminating the state income tax, Senate President Susan Wagle, R-Wichita, recently said that she’s “excited about moving to a consumption tax.” Does that mean an even higher statewide sales tax is coming, on food and everything else?
Indeed, former state budget director Duane Goossen has estimated that if the state were to rely on the sales tax to fund state government in the absence of a state income tax, which currently represents 46.5 percent of state general fund revenue, the sales-tax rate of 6.3 percent would need to be doubled.
For now, it’s bad enough that Kansas is second only to Mississippi (7 percent) in charging the highest sales tax on food in the country, and that there is little political will to right this regressive wrong in Kansas tax policy.