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COMMENTARY: Reform or eliminate unfair grocery tax

by EVAN KOCH/More Perfect Union
| August 10, 2022 1:00 AM

Anyone who shops for groceries knows that food costs much more than it did just one year ago. Indeed, while the overall consumer price index grew 7.5% in 2021, in the past 12 months the average grocery bill has risen a shocking 23% according to msn.com.

Among the reasons for this sudden rise are pent up demand and supply chain disruptions due to the pandemic, and major food conglomerates and energy corporations using inflation as cover for rising prices. Putin’s war in Ukraine has also driven up food and energy prices.

Recently, our Federal Reserve Bank has attempted to control inflation by adjusting the cost of borrowing money. In other countries, lawmakers have passed windfall taxes and price controls in efforts to focus on fighting climbing prices while protecting the working class.

Here at home the Idaho legislature could help relieve some of this inflation by suspending or even eliminating the grocery tax. That would provide Idahoans an immediate 6% discount on their grocery bills.

Idaho is one of only seven states that taxes all groceries. Twenty-three states tax only nonessential groceries like candy and soda. Thirty-two states do not tax groceries at all. In the states that do tax groceries, the average rate is just 4.2%. The Idaho grocery tax, at 6%, is 32% higher than the average.

The grocery tax might seem like it impacts everyone equally, because everyone pays the same 6%. But in fact its impact is not the same across the board.

The grocery tax is a perfect example of a tax that is regressive. Its impact is greatest on the poorest people.

To understand how significant this is, consider the following example.

The average family of four spends about $1037.50 each month on food, or $12,450 per year. That’s just under 10% of the pre-tax income of a family that earns $125,000 a year. But that same $12,450 is a whopping 31% of the entire yearly earnings for a family living on just $40,000 per year before taxes. Those proportions would be even higher if we were to only consider take-home pay.

In a Cornell University study, researchers found a significant positive correlation between grocery taxes and food insecurity. Food insecurity occurs when people are forced to buy cheaper quality food and in smaller quantities. The principal author of the Cornell University study says the grocery tax is “very regressive — probably the most regressive tax.”

There is at least one other reason for Idaho to eliminate the grocery tax.

The grocery tax probably motivates some Idahoans to shop elsewhere. Some order their food on-line. Others who live near the state line have a strong incentive to drive back and forth to supermarkets in Spokane Valley where food is not taxed. To the extent that Idahoans shop elsewhere, our local economy suffers.

Democrats, and some Republicans, oppose taxing groceries.

Taxes are a fact of life in an organized society. But taxes should serve a good purpose and be fairly distributed among citizens according to their ability to pay. The grocery tax is detrimental to the poor and is not distributed fairly among all citizens.

In this time of rapidly rising food prices, our lawmakers have the tools to help Idahoans. The grocery tax should be suspended or eliminated.

• • •

Evan Koch is chairman of the Kootenai County Democrats.

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