By Justin Wingerter
Jun 2, 2015
TOPEKA — As the Kansas Legislature continues its prolonged search for a solution to the state’s $400 million budget gap, grocers and child nutrition advocates are watching what happens to the state’s sales tax rate for unprepared food.
Most states and the District of Columbia don’t collect sales tax on food and many states that do offer a lower tax rate for food compared to other items. Kansas, however, currently taxes food at the same rate — 6.15 percent — as other consumer goods. Only Mississippi, with its 7 percent sales tax rate, places a higher state sales tax on food purchases than Kansas.
On Tuesday, the Kansas Senate adopted an amendment to set the sales tax rate for food at 5.7 percent but didn’t vote on the underlying bill.
In a plan that didn’t pass the Senate on Monday, the sales tax rate on food would fall to 6 percent, but not until six months after the overall sales tax rate was increased to 6.5 percent. On Saturday morning, Gov. Sam Brownback put forth a plan that wouldn’t create a separate sales tax rate for food, meaning the rate for food would increase to 6.5 percent.
Two of Kansas’ four neighboring states, Oklahoma and Missouri, tax unprepared food sales. Oklahoma’s tax rate is 4 percent while Missouri’s is 1.225 percent.
John McCormick, president and CEO of the Retail Grocers Association of Greater Kansas City, represents grocery stores in both Kansas and Missouri. McCormick says residents on Kansas’ northern and eastern borders often cross into Nebraska and Missouri for cheaper groceries.
“It’s just one more thing that could, and does, push people across the line,” McCormick said. “Gas is fairly cheap right now so they may drive across for cigarettes and liquor and while they’re there, they’re going to buy their groceries over there.”
McCormick said minor changes to the sales tax on food would create a lot of work for grocery store employees, who must electronically reset the rates at which each item is taxed, while providing very few savings for consumers.
Shannon Cotsoradis, CEO of Topeka-based nonprofit child advocacy group Kansas Action for Children, agrees.
“That’s not the kind of modification that’s really going to make a difference for struggling families,” Cotsoradis said.
Cotsoradis said the state’s comparatively high tax rate on food forces the state’s poorest families to decide between buying quality food and paying bills, such as rent and electricity. It also curbs the ability of low-income parents to buy nutritious food for their children, prompting them to purchase low-quality food in bulk instead, according to Cotsoradis.
Kansas City-based nonprofit group KC Healthy Kids points to a survey conducted last year by Fort Hays State University researchers that found 73.5 percent of the 2,203 Kansas adults surveyed supported eliminating the sales tax on food while 13.1 percent somewhat supported it.
“In addition to making healthy food more affordable for Kansans, cutting the food tax could help smaller and rural grocery businesses in the state by encouraging customers to shop in Kansas rather than in neighboring states with lower food taxes,” the group argues.
McCormick said he also supports eliminating the sales tax on food.
“I’m a proponent of zero taxes on unprepared food,” McCormick said. “That would help the lower-income wage earners.”
While Kansas Action for Children has supported eliminating the sales tax for food in the past, Cotsoradis said the group isn’t lobbying for it in the current political climate. Instead, she is hoping lawmakers “hold the line” and ensure the rate isn’t increased.
A report released Monday by KC Healthy Kids and Wichita State University researchers found Kansas’ sales tax on food is regressive, hitting the budgets of low-income families and individuals significantly harder than middle- and upper-class consumers.
“For the case of a family of three living in a metropolitan area, we find that the incidence of taxing groceries is under 0.2 percent of household income for those with income greater than $150,000 per year, while it is over 5 percent of household income for those households with income less than $10,000 per year,” the researchers wrote.