No fooling — House committee shopping April 1 demise of state sales tax on groceries
Current state law phases out 4% state portion of sales tax on food in 2025
Democratic Rep. Tom Sawyer, left, and Republican Rep. Adam Smith were among House Tax Committee members considering a bill Tuesday ending the state’s 4% sales tax on groceries. Under current state law, that state tax would end Jan. 1, 2025. (Tim Carpenter/Kansas Reflector)
TOPEKA — Sisters of Charity coordinator Rebecca Metz says legislation to do away April 1 with the state’s portion of sales tax charged on groceries would do more than alleviate the tax burden of low- and middle-income individuals and families.
Action by the 2023 Legislature and Gov. Laura Kelly to eliminate the state food sales tax on groceries in less than two months rather than in two years would enable ministries providing meals to food-insecure people across the state to stretch their budgets, she said. Many of these ministries don’t have the benefit of nonprofit tax status and rely on generosity of people who contribute without of a tax break.
“Please support everyday Kansans trying to meet their immediate food needs as well as helping increase the impact of various ministries working on food insecurity,” Metz said.
The House Tax Committee began Tuesday an exploration of House Bill 2111, which would zero out the state sales tax for food and food ingredients. The bill included an exemption from the Kansas sales tax — local sales taxes would remain — on children’s diapers and feminine hygiene products. Another element of the bill would start a special fund to account for revenue losses by grocery stores in special economic development zones financed through state-backed STAR bonds.
The initiative has a long road to passage by the House and Senate. Some lawmakers oppose the change, while others expressed interest in merging this reform with tax policy not as palatable to all parties. Gov. Laura Kelly urged legislators to swiftly end the state tax on groceries and expressed confidence an agreement to do that could be reached. She’s met with Senate and House leadership to seek a deal.
“We just had discussions this morning,” Kelly said Tuesday in an interview. “I’m optimistic we will come to some consensus.”
‘Don’t see a reason’
In the 2022 legislative session, Kelly proposed the Legislature terminate the state’s 6.5% sales tax on groceries. Legislators balked at that approach during an election year, but approved a bill cutting the rate to 4% on Jan. 1, 2023, 2% on Jan. 1, 2024 and zero on Jan. 1, 2025. Kelly signed it into law.
“We had quite a debate on food sales tax and I know it wasn’t what the governor wanted back then, but we came up with what I think was a compromise plan and the governor signed it,” said Rep. Clarke Sanders, R-Salina. “Relative to food, I don’t see any reason to revisit that now.”
Existence of a large state government revenue surplus in Kansas raised the prospect of advancing legislation this session to speed transition to the zero tax rate on food sales. That change would match sales tax laws in Colorado, Nebraska and Iowa. Missouri’s sales tax on groceries stands at 1.2%, which has enticed Kansans to cross the border to grocery shop. Oklahoma assesses a rate of 4.5% on grocery sales.
Topeka Rep. Vic Miller, leader of the House Democratic caucus, said the bill could be an example of bipartisanship leading to good public policy. He asked the committee to consider expanding the list of sanitary items covered by the bill to include soap, shampoo, toilet tissue, toothpaste and deodorant that would cut $14 million from annual state tax revenue.
The Kansas Department of Revenue estimated the original version of the House bill would cost the state treasury $40 million in the fiscal year ending June 30, $301 million in the next fiscal year and $136 million in the subsequent fiscal year. The projection was based on an assumption 15% of all sales tax collections were related to groceries.
“I say go fast and do it now,” Miller said. “Let us not concern ourselves with who gets credit for eliminating the sales tax on the items mentioned in the bill. Let us go about the state declaring that we all did something good that will benefit every Kansan.”
There was no public testimony in opposition to food sales tax reform at the House hearing, but several proponents specifically requested the House exempt diapers and hygiene products.
‘Kansas is better than this’
Becca Houlehan of Leawood and Izzy Zschoche of Prairie Village, both students at Notre Dame de Sion High School, said they formed an organization last year known as “Equity.Period.” The goal was to provide feminine hygiene products in restrooms at their school. They later expanded to other locations and have donated 12,000 items. They do shop in Missouri, which has a lower state sales tax, to maximize value of donations.
“Still, we know this isn’t enough,” Houlehan said. “Basic human necessities are increasing in price to the point it’s cost prohibitive for many. We believe Kansas is better than this. Humanity should be better than this.”
Jon McCormick, president and chief executive officer of the Retail Grocers Association of Kansas and Missouri, suggested the committee examine the issue from both sides of the checkout counter. He represents 125 supermarket and convenience stores.
“There are two goals here. One, help the Kansans have a lower food bill — now,” he said. “The people who spend most of their food dollars in grocery stores are the people who need this implementation of the reduction in the food tax sped up. They cook meals at home and rarely can afford to eat out.”
He said sales tax reform would help Kansas retailers stay in business because they would take a step closer to be competitive on taxation.
“We’ve lost about 100 stores since 2008. Most of them have been independent stores and they’re all in small towns,” he said.
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