Grocery tax could be gone in 2019

COEUR d’ALENE — Local legislators are primed to repeal the 6 percent grocery tax, with Governor-elect Brad Little ready to sign it into law. His predecessor, Gov. Butch Otter, vetoed a tax repeal bill in 2017.

Little’s Chief of Staff, Zach Hauge, told The Press: “Governor-elect Brad Little fully supports removing the grocery tax for all Idahoans.”

Hauge said Little wants legislators to agree on the definition of groceries, and that the state needs to be “in a fiscally stable position to remove the tax on groceries.”

Idaho’s neighbors Washington, Oregon, Montana, Wyoming, and Nevada do not tax groceries. Utah taxes groceries at a lower rate than its general sales tax.

“This repeal would make Idaho more competitive with neighboring states,” said Hauge.

Sen. Steve Vick said he will support the grocery tax repeal “because I believe it is fundamentally unfair to tax food.”

He anticipates that following the repeal, grocery selection at Idaho stores may get better. Fewer North Idahoans will cross the state line to buy groceries in Washington, Vick said. In addition, everyone’s food bill will go down by 6 percent, he said.

The state budget will initially take a hit, depending on how legislators define food, “but long term I believe that will be balanced out by the economic development in the border communities,” said Vick.

“Some smaller communities along the Washington or Oregon border have no grocery stores left,” said Vick. “Repealing this tax will allow those communities to compete with grocery stores across the state line on a level playing field. Having a grocery store closer to home will be a welcome addition to those communities.”

Sen. Don Cheatham said he will support the grocery tax repeal. It will keep more money in residents’ pockets, simplify tax forms, and save the state money on administrative expenses spent processing grocery tax credits, he said.

“Taxpayers shouldn’t be taxed on a necessity, like food,” Cheatham said. “Approximately 37 states do not pay sales tax on groceries.”

Sen. Mary Souza is on board.

“For me it is a philosophical issue,” she said. “I don’t believe there should be tax on the basic food that people need to survive. We can tax optional items, but food is a necessity for all.”

Souza said repeal would benefit stores in Post Falls and other border towns. She noted that tourists would still pay sales tax at Idaho restaurants, but would not pay taxes on food at Idaho grocers.

The end of the grocery tax credit would “let people keep more of their money with every food purchase, rather than having to wait until tax filing once each year,” she said.

Incoming freshman Rep. John Green also supports repealing the grocery tax. Green said, “Taxing subjects that are necessary to life are inherently unfair and immoral.”

Green said he is working on legislation to make up for a possible decrease in revenue following the grocery tax’s repeal. He also said Idaho should unhitch its revenue wagon from the “federal Titanic” — the federal tax system.

“It’s time we divorced them (the federal government) and implemented a fair system that would meet Idaho’s revenue needs without risking our future economic survival, in light of the inevitable sinking (collapse) of the Federal Monetary and Tax systems,” said Green.

Rep. Tony Wisniewski said, “I believe that taxing groceries impacts lower income families the most, and I would support a bill to repeal this tax.”

The new representative said Kootenai County residents would benefit from the grocery tax repeal more than many other Idahoans. More shoppers would stay in Idaho, and “The money saved would likely allow more money to be spent, and taxed, on other items in our local stores. Similarly, people from Washington would not need to avoid purchasing groceries in our county if they were here for other purposes.”

Rep. Jim Addis said he wants to see the actual bill before answering the question, but broadly speaking, he supports removing the tax on groceries. He also said he is “all for” helping local grocers compete better with their rivals across state lines.

However, he noted, the grocery tax credit would also be removed.

“This means that every man, woman, and child will lose their $100 tax credit,” he said. “For those over 65 years of age, the credit is $120. A family of four will not pay tax on groceries, but lose $400 in their state grocery tax credit, a dollar for dollar reduction in their state income tax.”

Addis did the math and said that a family of four who spends $500 per month on groceries will pay $360 in taxes for the food each year.

“In this case, the grocery tax credit of $400 is $40 more than they pay in sales tax, so eliminating the grocery tax would cost them an extra $40,” he said. “If they spend less, it will cost them more. Again, it depends on the individual’s situation.”

Addis said some people are looking into modifying the grocery tax credit “to help ensure that all our citizens are made whole for the grocery sales tax they pay.” If it can be done, Addis said, “We can make our citizens whole while at the same time continuing to tax thousands of out-of-state visitors, so they help pay their fair share of the services and infrastructure they use while visiting.”

Reps. Ron Mendive and Vito Barbieri said they, too, support a grocery tax repeal. Rep. Paul Amador did not return requests for comment.