By Justin Wingerter
June 9, 2015
Child nutrition advocates are cautiously optimistic about a provision of a tax bill passed in the Senate that would lower the state’s sales tax on food.
Legislation approved by Senate over the weekend would increase the state sales tax from 6.15 to 6.55 percent, generating about $187 million. The tax on food would drop to 4.96 percent beginning in July 2016, six months after the overall sales tax would increase.
The bill, being considered in the House on Tuesday, also eliminates a $15 million food sales tax credit.
Kathy Damron, a Statehouse lobbyist for KC Healthy Kids, said the Senate’s action was a positive development.
“We’re very pleased that the Senate gave its support,” Damron said. “This is one of the lowest sales taxes on food the Legislature has considered in recent memory.”
Shannon Cotsoradis, CEO of Kansas Action for Children, agreed, calling it “a significant step in the right direction.” She worries, however, about the six months between when the overall sales tax would increase and when the sales tax on food would decrease.
“In the short term, I think low-income families will actually be paying more for their groceries,” Cotsoradis said.
Before 2012, the food sales tax rebate was refundable, allowing families with no income tax liability to receive a rebate for money spent on food. Changes made during an overhaul of Kansas tax policy no longer allowed for refunds but still allowed some low-income families to deduct money spent on food from the amount they owed the state in taxes.
Under the 2012 policy, taxpayers are eligible for a rebate if they have a gross income under $30,615, live in Kansas and are either disabled, over the age of 55, or caring for someone under the age of 18.
“Prior to 2012, the high sales tax on food was blunted by giving low-income individuals and families a refundable tax credit,” Damron said. “In 2012, they changed that provision to make it nonrefundable, meaning the poorest of the poor also saw no relief for sales tax they paid on food.”
Child nutrition activists have been working for nearly a decade to lower the sales tax, Damron said, despite her contention that it has broad bipartisan support. She said it is noteworthy that the change could come during a record-long session of the Legislature.
“While it’s not an ideal year, in many ways it’s the perfect time,” Damron said, “because legislators are being forced to examine the whole tax picture.”
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.
“I think it is a more significant change but we will still lag behind the region as a whole,” Cotsoradis said of the Senate plan.
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.
Cotsoradis is concerned that the delay in implementing the food sales tax reduction could allow legislators to renege on their promise to lower it.
“We may never actually realize that promise,” she said. “But we’re hopeful.”