The biggest surprise of the legislative session that ended Wednesday wasn’t the GOP infighting that gained so many headlines. It was the repeal of the state’s tax on groceries.
The grocery tax has been on the books in some form or the other since 1965, when the rate was 3 percent. Today, Idaho taxes groceries at 6 percent. It’s one of only 13 states that tax grocery food.
There’s been a long tradition of bipartisan support for lifting this tax, but historically the Senate has blocked efforts to nix it. This year, though, it was the Senate leading the opposition charge, when it overhauled a tax-relief bill from the House that had favored income tax cuts.
The major opponent this time around is Gov. C.L. “Butch” Otter.
Earlier in the session, the governor broke from his usual policy of not commenting on pending legislation to warn lawmakers that he was against repealing the grocery tax. Lawmakers did it anyway, and now it’s up to Otter to decide whether he’ll sign or veto the bill.
We encourage him to sign it.
There’s a sense Otter may be waffling, though. Just 30 minutes before it was set to begin, Otter canceled a press conference Friday where he was expected to announce his intentions. The official excuse was that the governor had laryngitis, exactly the kind of ailment you get when you’re not quite ready to make a big announcement. He now has the weekend to make up his mind, if he hasn’t already.
But just in case Otter still needs some convincing, let’s make the argument one more time.
As the ultra-conservative Idaho Freedom Foundation pointed out in January, the grocery tax makes little sense. It temporarily removes about $150 million from state’s economy, essentially giving the state an interest-free loan, only for the state’s tax commission to turn around and give the money back to taxpayers in the form of a credit at tax time. Plus, the state spends about $1 million processing income tax returns from folks who are filing only to get their $100 grocery tax credit. Talk about inefficient government.
The grocery tax has broader economic impacts, too. Because most of Idaho’s border states don’t have a grocery tax, businesses are more likely to open on the wrong side of state lines, stripping Idahoans of job opportunities and border communities of property taxes from new businesses.
For us, though, it comes down to a philosophical argument. We simply believe it’s wrong to fund the state using taxes on an essential need like food. Poor people, especially, are hardest hit. Paying $12 in taxes on a $200 grocery trip may not seem like a big hit for some people, but that extra 12 bucks could mean missing a meal for needier families.
House Assistant Majority Leader Brent Crane, R-Nampa, summed up our position nicely when he said: “I think it’s immoral. I think it’s wrong to tax people on their food. The time has come to give the people their money back and quit taxing their basic needs.”
It’s important to acknowledge that repealing the tax will leave the state with about $52 million less. (Interestingly, that’s about the same amount House Republicans wanted to slash through an income tax cut earlier in the session.) But we have confidence frugal lawmakers can find that savings in next year’s budget. For lawmakers who campaign on smaller government, it’s time to put up or shut up.
For Otter, it’s time he reflect the will of the people and repeal this terrible tax.