Plans to lower food sales tax face hurdles

Advocates shouldn’t give up until Kansas’ food sales tax is gone.
Advocates shouldn’t give up until Kansas’ food sales tax is gone. AP

State leaders at least are talking about reducing the food sales tax burden.

Too bad the state’s finances are so precarious that the Legislature and governor are unlikely to do the right thing right away, which would be exempting food from sales taxes with the same zeal and certainty with which they exempted nonwage business income from state income taxes.

To its shame, and unlike most states, Kansas taxes food purchased at grocery stores at the full sales tax rate, which was hiked from 6.15 to 6.5 percent last year to cover a budget shortfall. Between the statewide rate and their local sales taxes, some Kansans now pay the highest sales taxes on food in the nation – as much as 9 and 10 percent.

But the state needs every penny it gets from the 6.5 percent statewide rate to cover the budget, especially after February’s tax collections came in $53 million less than estimated. Every 1-cent cut in the sales tax on food would cost about $66 million in revenue.

To the credit of its sponsor, Rep. Mark Hutton, R-Wichita, one proposed remedy to the food tax problem would pay for itself. House Bill 2444, which has been promised a House hearing, would cut grocery taxes to 2.6 percent while ending the unfair exemption of state income tax enjoyed by 330,000 business owners since Brownback’s 2012 tax policy. Its problem is that Brownback has threatened to veto any attempt to roll back his signature business tax cut.

A more politically viable idea is a constitutional amendment to reduce the food sales tax rate to 4 percent in 2017 and 2 percent in 2018 before zeroing it out in 2019. Its sponsors include Sens. Oletha Faust-Goudeau, D-Wichita, and Michael O’Donnell, R-Wichita. But deferring to voters on food sales tax is a political stunt – and irresponsible, in the absence of a plan for how the state budget could afford estimated loss of $350 million annual revenue after the amendment’s inevitable passage.

Last week Brownback said of proposals to eliminate the food tax: “I’ve been open to it, but you have to pay for it.”

He suggested a new sales tax rebate for low-income Kansans (an old one was replaced by an income tax credit for lower-income households that doesn’t benefit anyone too poor to owe income taxes).

“You’d be better off going off with some sort of rebate program, low-income rebate, on food sales than doing it across the board,” Brownback said.

The rebate’s revival would be better than the status quo. But advocates shouldn’t give up until Kansas’ food sales tax is gone.