Kansas governor plans to ‘axe’ sales tax on food, joins AG in urging legislative action

by Noah Taborda, Kansas Reflector

Topeka — Kansas Gov. Laura Kelly says she plans to introduce legislation in January to exempt food from the state sales tax, joining Attorney General Derek Schmidt in urging GOP leaders to take action on the issue.

Kelly, a Democrat running for re-election, said her plan will “axe” the sales tax on groceries. Schmidt, the favorite to receive the Republican nomination for governor in next year’s election, sent a letter last week to legislative leaders asking to either eliminate or significantly reduce the same tax.

The governor has supported efforts to reduce the tax burden on food during past sessions, including a plan that would have re-instated a tax rebate for low-income families. Her office planned the Monday announcement before Schmidt’s campaign announced his letter on Friday.

“For too long, Kansans have been paying more for groceries than people in almost every other state,” Kelly said. “This legislation will save the average Kansas family $500 or more a year on their grocery bill, and thanks to the fiscally responsible decisions we made before and during the pandemic, we can cut the food sales tax and keep Kansas’ budget intact.”

Under Kelly’s proposal, a family of four is estimated to save $500 on their grocery bill. Kelly estimated the state’s loss of revenue to be $450 million.

Kansas is one of seven states with a full tax on groceries, and the state rate of 6.5% is the second highest in the country. At least 37 states levy no sales tax on groceries and six more have reduced grocery taxes.

Grocery prices have been rising across the country with the latest consumer price index showing a 5.4% increase in prices from September 2020 to September 2021.

“If Kansas is to thrive and grow, our public policies must attract, retain and support working families,” Schmidt wrote in the letter to Senate President Ty Masterson, R-Andover, and House Speaker Ron Ryckman, R-Olathe. “Our state must be an affordable place to live, work and raise a family. In light of the state’s current budget situation, carefully constructed tax relief that benefits all Kansans by eliminating or at least significantly reducing the sales tax on groceries is possible, necessary and overdue.”

Schmidt was critical of Kelly for vetoing a 2019 bill that included a one-cent reduction in the sales tax on groceries, among other tax reforms. In vetoing the bill, Kelly argued it would have set the state back to former Gov. Sam Brownback’s tax policies by predominantly providing relief to large, multinational corporations who hoped to evade paying state income taxes on overseas profits.

Kelly said Monday any food sales tax cut measure would need to arrive on her desk without other provisions tacked on.

“I am glad that Derek Schmidt supports our plan to eliminate the sales tax on food,” said House Minority Leader Tom Sawyer, D-Wichita. “Hopefully the Speaker of the House and Senate President will pass it without bogging it down with excessive additional tax cuts for the rich.”

The Kansas Democratic Party highlighted Schmidt’s record of supporting sales tax increases while in the Legislature. In 2002, he voted for a package that included an increase in sales tax from 4.9% to 5.3%. In 2005, he voted to allow an increase in local sales tax.

“Despite what Derek Schmidt might say today, he can’t run from his history of raising taxes on Kansas families that goes back decades,” said KDP spokesperson Emma O’Brien. “Derek Schmidt has a track record of looking out for himself and his special interest donors, not Kansas families and Main Street small businesses. His sudden change of heart is nothing more than a bad-faith attempt to play politics, and Kansans can see right through it. Kansans don’t want empty words, they want action, and Derek Schmidt can’t deliver.”

Kansas Action for Children President John Wilson praised the timing of the governor’s announcement as the state experiences strong revenues. He said sales tax worsens income inequality because low-income people must pay a higher share of their income on basic needs like groceries.

An estimated 21% of children younger than 19 are living below the federal poverty level, Wilson said, and ending the food sales tax could reduce food insecurity among this group.

“Kansans have experienced one of the highest sales taxes on food in the country for years, a consequence of previous poor state tax policy,” Wilson said. “Now that Kansas has recovered from that policy and has stable revenue, it’s time to invest in Kansas workers and their families with this commonsense policy that has long had bipartisan support.”

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