Food sales tax a point of shame for Kansas

When the Legislature decided the time was right in 2012 to eliminate and slash some taxes, the regressive 6.3 percent sales tax on food should have been the first thing to go.

Yet in 2016 Kansans are paying 6.5 percent statewide sales tax for food purchases, plus local add-ons that push rates past Mississippi’s 7 percent and even beyond 10 percent in some places to be the nation’s highest food sales taxes.

And what about last year’s legislative promises to revisit the tax in the 2016 session? Ongoing state budget problems largely have silenced such talk.

Meanwhile, studies released by KC Healthy Kids and conducted by the Kansas Public Finance Center at Wichita State University’s Hugo Wall School of Public Affairs have provided more reasons to hate the state’s sales tax on food.

Extending the sales tax to groceries increases the tax’s regressivity, the researchers concluded: “A household in the lowest income group pays anywhere from 2.7 percent to 8.4 percent more of their income in taxes on groceries than does a household in the highest income level.”

Most recently, WSU reported that Kansas and some local governments are losing revenue as grocery shoppers cross state lines to pay lower sales tax. Wichita-area consumers are not well-positioned to join the border hopping, as alluring as Oklahoma’s 4.5 percent sales tax rate might be for some. But the maneuver can pay off big for Kansans who live near Colorado or Nebraska, which exempt food sales from taxes entirely, or near Missouri, which taxes food at just 1.225 percent.

The WSU reports don’t even account for the recent sales tax increase from 6.15 to 6.5 percent, which has to be worsening the trends.

Credit Rep. Mark Hutton, R-Wichita, for his efforts toward ending Kansas’ taxation of food at the full 6.5 percent rate – a goal he shares with 88 percent of Kansans in a recent state survey. This month he filed House Bill 2444 to lower the tax rate on food to 2.6 percent while ending the income tax exemption for non-wage business income.

It won’t be a surprise if the bill stalls, as even a 1 percent cut in the food sales tax could mean $66 million less annual revenue for the state. And support for the business exemption remains strong.

But it’s a point of shame for Kansas that it has turned to a tax that disproportionately burdens low- and middle-income residents to help pay for income tax cuts most benefiting business owners.

This story was originally published January 25, 2016 at 6:07 PM with the headline "Food sales tax a point of shame for Kansas."