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Grocery and other taxes

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The question is, who is taxed?

We’ll circle back around to that, as we review the last hot topic of the Idaho legislative session, the grocery tax.

Or, to be more precise, the sales tax as it applies to groceries, which in Idaho it does. In nearly all of the 45 states that impose a statewide sales tax, groceries are exempt from the tax, or in some cases their sales carry a reduced rate. Idaho’s in the minority on this one.

The idea of exempting groceries from the Idaho tax has been around for decades, and it has had backers from both political parties. (Shall we mention that Idaho’s current sales tax was pushed through half a century ago by a Republican governor and legislature?) In an era of tax cutting among anti-tax legislators, the grocery sales tax cut hasn’t engendered really strong support for a long time. But backing for it energized this year, picking up support from various wings of the Republican legislative caucuses and among Democrats as well. The vote margins were strong enough that a veto likely would have been overridden if the legislature were still in session.

All that said, the veto by Governor C.L. “Butch” Otter, who proudly has pointed to many tax cuts in recent years, but also criticized the repealer bill, did not come as a shock.

This section of his veto message did, though: “The advice from Utah was simple and straightforward: Don’t do it. The ramifications of lifting the sales tax from food had made budgeting much more difficult with the loss of what indisputably was their most stable and consistent source of revenue for essential government operations. Taxpayers benefited almost imperceptibly while lawmakers found themselves dealing with the peaks and valleys of income tax and other financial supports that are far more susceptible to economic fluctuations. Everyone benefits from some kind of government service. Everyone eats.”

There’s a real logic to this, a reasonable case. What’s a little shocking is that Otter, he of such libertarian background and inclinations, would be the one making it. You could make similar arguments for any number of the tax cuts enacted over his governorship, which have been estimated at a billion dollars worth, but Otter never did before this. Otter making the case for a veto that a benefit to taxpayers would be “imperceptible” while legislators would have to struggle? Imagine what he might say if a Democratic governor ever had the temerity to use that line of logic.

We don’t much have to guess, since the response from other Republicans has been mostly angry. On Facebook, legislator Marv Hagedorn (a contender for lieutenant governor) declared himself “Very disappointed. This repeal would not have affected the next year’s budget, so we would have had next year’s session to tweak it as needed. There is no way to know how much sales taxes come in for food alone as the state has no method of garnering that information, nor do we know how much sales taxes are being lost due to Idahoans shopping across state lines where there are no taxes on food.”

Lieutenant Governor Brad Little, one of Otter’s closest allies, took the unusual step before the announcement of publicly urging Otter not to veto, setting himself up to take the contrary point of view in the race for governor. In that developing and crowded race, he won’t be alone; at least two of his fellow candidates also favor repeal.

What constituents might be pressing for, at least as much in the coming debate though, is an answer to another question.

In a legislature so eager to cut taxes, why has this one – one of the most regressive taxes on the books – had so much more trouble making a way to passage over the course of so many years, than so many other tax cuts? Not only Governor Otter should be the recipient of that question.

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