How much you pay for groceries in the coming years may depend on whether Kansas lawmakers endorse proposals to cut the sales tax rate on food.
A new effort to make groceries cheaper would leave the final decision in the hands of Kansas voters, but the Legislature must first sign off.
Plans to slash the rate have surfaced several times over the past few years, but have never made it into law. Kansas has a more stable budget this year and has extra cash, however – making it easier for the state to absorb the loss of revenue that would come with a reduction. But lawmakers also face a Kansas Supreme Court decision that could require schools to receive hundreds of millions in additional funding that would quickly siphon off the state’s surplus.
People buying groceries in Kansas pay among the highest tax on food of anyone in the country. Unlike some other states, Kansas taxes food at the same rate as any other product.
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Neighboring Missouri taxes food at a rate of about 1.2 percent, for example. In Colorado and Nebraska, the rate is zero. Kansas is one of only 14 states to tax food and among only seven states that tax food at the full sales tax rate.
When the Kansas sales tax rate of 6.5 percent is combined with local sales taxes (an additional 1 percent in Sedgwick County), shoppers can end up paying several extra dollars each time they go through checkout. That means someone spending $100 at a grocery store in Sedgwick County is paying an extra $7.50 in sales tax.
In other places, it’s even more. Sales tax rates in Johnson County exceed 9 percent in some areas.
Over the course of a year, Kansas families and individuals pay hundreds of dollars extra for food because of the tax.
"Our constituents are demanding relief from Kansas’ burdensome sales tax rates when it comes to putting food on the table for their families, and our state-line grocers need a more level playing field," said Sen. Tom Holland, D-Baldwin City, referring to grocery stores that sit near the border with other states that have lower rates.
It’s ‘tough enough to survive’
Holland and other lawmakers have put forward a constitutional amendment that would gradually lower the sales tax rate on food beginning in 2019. The state sales tax rate would eventually fall to 2 percent in 2020. The proposal was put forward last year, but a Senate committee held a hearing last week.
Revenue coming into the state general fund would decrease by about $246 million a year when the tax reduction was fully implemented, according to Kathleen Smith, a tax specialist at the Kansas Department of Revenue.
The House passed a bill last year that would have reduced the sales tax on food by 1 percent but it didn’t become law.
Rep. John Whitmer, R-Wichita, said he plans to offer a bill soon to reduce the sales tax on food by 1 percentage point. His plan would cut the sales tax less than the constitutional amendment, but would also cost less money – roughly $60 million to $70 million a year.
His plan would be paid for by eliminating some other sales tax exemptions, such as those for nail salons, barber shops, and bingo cards, among others.
Customers at Hometown Market in Bird City, near the Nebraska and Colorado border, have told owner Brenda Johnson many times that they shop in neighboring states to avoid sales tax.
“As a small business owner, it is tough enough to survive in a town of 500 or less, let alone hear of shopping out of town and state,” Johnson said.
Emily Brown, CEO of Food Equality Initiative, a Kansas City-based non-profit that focuses on increasing the health of low-income families diagnosed with food allergies and celiac disease, said she lives in Kansas and personally pays an average of $31.20 a month in taxes on groceries.
Beyond saving money overall, a tax reduction on groceries would also make it easier for people with medical diagnoses to buy the food they need, she said.
"Having the additional tax burden further limits access to the necessary foods to maintain their health," Brown said.
Revenue would be lost
While every Kansan would save at the checkout counter, the state would also lose revenue under any proposal to cut the food sales tax.
Without an offsetting tax increase elsewhere, Kansas would lose the revenue at a time when lawmakers are looking at increased funding for schools and other agencies.
Gov. Jeff Colyer has expressed doubts that lawmakers will take significant action on taxes this year. In 2017, the Legislature fought then-Gov. Sam Brownback over the repeal of his signature tax cuts. Lawmakers ultimately prevailed, but the fight strained relations between lawmakers and the governor’s office.
"I’ll look at anything the Legislature sends my way. We’ll give it due consideration," Colyer told reporters when asked about a food sales tax cut. "But right now, I don’t see the Legislature passing a different tax proposal."
Researchers have found that eliminating the sales tax on food would have either neutral or very small negative effects on economic growth.
Kenneth Kriz, director of the Kansas Public Finance Center at Wichita State University, studied the effects of taxes on groceries between 2015 and 2017, along with other researchers. They assumed that Kansas would have to maintain a balanced budget after cutting the tax rate and created estimates for an income tax increase large enough to offset the lost revenue.
Overall, they found that Kansas would gain 241 net jobs, which Kriz called fairly modest. Eliminating the sales tax on food would also add $10.4 million in economic value to the state by freeing up income and aiding grocery stores near the state border.
A plan like Whitmer’s that changes Kansas law, instead of the state constitution, may be a quicker and easier process. Passing a bill requires a simple majority of lawmakers and a governor willing to sign it.
On the other hand, amending the constitution requires two-thirds majorities in both the House and Senate. A majority of Kansas voters must then approve it.
"With respect to process, it is not entirely clear why a constitutional amendment is the preferred vehicle for this initiative," said Michael Schuttloffel, director of the Kansas Catholic Conference, which supports lowering the food sales tax rate.
"All things being equal, a statutory change would seem to offer the simpler means for addressing this particular piece of tax policy."
The advantage of a constitutional amendment is that it would be harder to reverse, proponents say. Lawmakers could not simply vote to raise the tax rate if the state starts to once again hurt for revenue but would have to ask voters for permission.