In a year when Kansas is struggling to find money to keep schools open and potholes paved, who would have expected the introduction of a bill to phase out Kansas onerous sales tax on food.
Surprise, that’s exactly what’s being discussed in the Legislature. Kansas lawmakers are considering a couple of proposals to gradually eliminate the state;s sales tax on groceries and even more surprising the proposals have the potential of making their way to the floor for a vote.
Kansas is one of only seven states that charge a sales tax on food. Groceries are exempt from state sales taxes in 32 states, while six states charge a reduced state sales tax for groceries. Five states don’t have sales tax.
If you’ve ever taken a college economics class you know that sales tax is considered a regressive tax, which means it hurts the poor the hardest. Since the poor spend a larger percentage of their income on food, the sales tax on food significantly increases their overall rate of tax in proportion to their income.
A recent study by Wichita State University’s Hugo Wall School confirmed this fact: the less income a family makes, the higher the percent of their income they pay in taxes.
For example, a family of three living in a metropolitan area with an income greater than $150,000 a year spends under 0.2% of their household income on grocery taxes. For a family with an income of less than $10,000, the tax burden climbs to 5% of household income, the study found.
Opponents say sales taxes, if used at all, should be levied on non essential items, but never on something as essential to life as food. That’s the premise most states have used to justify not applying sales tax on food.
Currently, there are two proposals to reduce sales tax circulating in the legislature. One would phase out sales tax by statute, a change voted on by the legislature. The other plan is a proposed constitutional amendment that would put the concept of phasing out sales tax to a vote of the people, possibly during November’s election.
The constitutional amendment, as currently being considered in the Kansas Senate, would reduce the current 6.5% sales tax to 4% starting in July 2017, to 2% in 2018 and exempt grocery from sales tax beginning in July 2019. This proposal was sponsored by a bi-partisan group of 11 Senators.
The proposed statute change was introduced in the Kansas House by Rep. Mark Hutton, a Wichita Republican. It would drop the sales tax on groceries to 2.6% while ending the income tax exemption on some 330,000 businesses. That bill is expected to get a hearing in the House Taxation Committee.
Stay tuned, it appears reduction in sales tax may get some traction this year, especially since every member of both the Kansas House and Senate are up for election.