Kansas would still tax food more than just about anywhere else in the United States, even if a proposed reduction before the Legislature becomes law.
For all the talk among lawmakers this year about taking a bite out of the cost of groceries, the plan closest to passing amounts to a nibble. Annual savings for many families would likely add up to less than $100 — $1.92-per-week.
A proposal to cut the food sales tax rate from 6.5 percent to 5.5 percent sits in Senate Bill 22, a large, highly-controversial measure that makes numerous changes to the state’s tax code. The House approved the bill last week; the Senate could vote anytime to send it to Gov. Laura Kelly.
Cutting the food tax will help the most-vulnerable Kansans, said Ashley Jones-Wisner, state policy director at KC Healthy Kids, which works to improve access to affordable, healthy food.
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“That said, just a one percent decrease is not going to make us competitive with our Midwest neighbors,” Jones-Wisner said.
Neighboring states Colorado and Nebraska don’t tax food. Missouri taxes it at 1.225 percent; Oklahoma at 4.5 percent.
Over the years, most states have moved to decouple their sales tax rate from how they tax food. Kansas never did, leaving it with one of the highest tax rates on food relative to other states.
About a dozen states still tax food. Of those, several tax food at a lower rate than other goods, according to information compiled by the Washington, D.C.-based Tax Foundation. Just seven states – including Kansas – tax food at the same rate as everything else.
Only Mississippi, with a state sales tax of 7 percent, taxes food more than Kansas.
Even if Kansas’s tax rate for food drops to 5.5 percent, the state would still have the third-highest rate on food in the country. Idaho, which taxes food at 6 percent, would move into the number two spot.
In addition, the reduction doesn’t affect local sales taxes. In many cities across the state, the tax on food would still approach double digits even with a reduction of the state tax rate.
Kansas City, Kan., as well as Kansas City-area communities such as Bonner Springs, Mission, Shawnee and Overland Park all have a combined state and local sales tax higher than 9 percent, according to the Kansas Department of Revenue. The state’s largest city, Wichita, has a 7.5 percent combined rate.
Grocery stores in border areas are particularly sensitive to tax differences between states. The city administrator of Oberlin, a small city in northwest Kansas near the Nebraska line, pleaded with lawmakers last month to lower the food sales tax rate.
“As administrator I have to watch a local business struggle, and any sales tax revenue simply drive out of town,” Halley Roberson said.
Still, if the tax rate on food is cut by one percentage point, the savings during any single trip to the grocery store would be small: you would have to purchase $100 of food to see $1 in tax savings.
Some people may not even notice a reduction, said Scott Anglemyer, director of the Kansas Association of Community Action Programs, an anti-poverty organization based in Topeka.
“When it happens at the time and it’s parceled out over each time you spend, you don’t notice that savings,” Anglemyer said. “So I don’t think most of our low-income families would really notice that reduction in sales tax made a meaningful difference in the amount of money they have.”
He added: “Now, 50 dollars is 50 dollars. And 50 dollars is a lot to a low-income family a lot of times.”
Rep. Fred Patton, R-Topeka, said he views the reduction in Senate Bill 22 as a first step toward eventually eliminating the sales tax on food altogether.
“It’s going to take time to scale back the food sales tax, so I think anything we can do in that regard is a good move,” Patton said.
Kansas lawmakers have talked about cutting taxes on groceries for years. It’s a rare spot of bipartisan agreement.
With Senate Bill 22, lawmakers are coming closer to passing a food sales tax cut than they have in the past few years. But Democrats, who have pressed for a cut, are opposing the bill.
The legislation includes business income tax changes that they say amount to giveaways to large, multi-national corporations. Under those provisions, Kansas is expected to collect about $245 million less over the next three years than it would otherwise at time when Kelly, a Democrat who took office in January, is promising to rebuild state government.
The reduction in the food sales tax rate would cost Kansas about $176 million over the same period.
“Throwing a penny at the food sales tax so someone can put on a campaign postcard that I lowered your food taxes, 6 ½ to 5 ½ cents. That’s disrespect to working people of Kansas, trying to claim we’re giving them something for it,” Rep. John Carmichael, D-Wichita, said during debate on the bill.
If the Legislature passes Senate Bill 22, Kelly would have to decide whether to sign or veto the bill. Although she hasn’t definitively said what she would do, she has previously made comments critical of the legislation.
Senate Bill 22 isn’t the only option for passing a food sales tax reduction, however.
Another bill, which would gradually reduce the tax on food to 3.5 percent by 2022 had a hearing in February, but hasn’t advanced out of committee.
“We’re just really behind in addressing this issue,” Jones-Wisner said. “Most states have dealt with it many years ago … we don’t address the fact that it’s not a luxury item and that this is something everybody needs. They can’t choose to go without it.”