Tag: Food sales tax

Reducing food sales tax benefits Latino communities, Kansas governor says

by Noah Taborda, Kansas Reflector

Topeka — Gov. Laura Kelly on Monday said the new law gradually eliminating the state sales tax on food will benefit Latino Kansans who are disproportionately affected by food insecurity.

In part because of the pandemic, a growing number of people across Kansas rely on food pantries. According to Feeding America, Food insecurity rates rose from 12.1% to 14.1% in 2020.

Adding to the issue are rising costs at grocery stores, with prices up by about 8.5% in the past year. During this time, communities of color felt a disproportionate impact of COVID-19 on their access to food.

House Bill 2106 would eliminate the 6.5% grocery sales tax — the second highest in the nation — by 2025, providing needed financial flexibility to ensure Latino Kansans have all their needs met, Kelly said during an appearance at Mi Pueblito Meat Market, a Latino-owned grocery store in Topeka.

“No Kansans should ever have to choose between paying for food and paying for gas or health care or rent,” Kelly said. “Having a high grocery tax means more Kansans are forced into making that untenable choice far too often. The truth of the matter is that food sales tax takes the most from those who have the least.”

The governor’s appearance in Topeka was the final stop in a tour across a handful of Kansas communities promoting the legislation, which was voted into law with bipartisan support. In Wichita, Kelly discussed how the tax cut would reduce food insecurity, and in Kansas City, Kansas, the Democratic governor addressed making grocery stores along state borders more competitive.

Kelly was joined at Alonso Villasenor’s grocery store by members of the local legislative delegation and Latino community stakeholders to discuss the impacts cutting the food sales tax would have. According to Kelly, elimination of the tax would save a family of four $500 per year on reduced grocery costs.

“Soon, Kansans will have more money in their pockets to afford their groceries and treat their families to Alonso’s famous tacos,” Kelly said, touting her efforts to bring Republicans and Democrats together on this action.

The spokesman for Derek Schmidt, Kelly’s presumptive Republican opponent in the governor’s race, said this was just another “carefully scripted, election-year photo op taking credit for other people’s work.”

“She vetoed this food tax cut before, and only this year with her own job on the line did she follow Attorney General Schmidt’s lead,” said C.J. Grover, the campaign manager for Schmidt. “Kansans will have a choice in November between Laura Kelly, who focuses on hatchet-wielding publicity stunts, or Derek Schmidt, who works with the Legislature to deliver real results for Kansas families.”

In vetoing the 2019 bill, Kelly argued it would have set the state back by predominantly providing relief to large, multinational corporations who hoped to evade paying state income taxes on overseas profits.

In 2002, as a state Senator, Schmidt voted to increase the sales tax on food from 4.9% to 5.3%.

The 6.5% state sales tax on groceries will drop to 4% on Jan. 1, 2023. Subsequent reductions would take it to 2% in 2024 and zero by Jan. 1, 2025.

The proposal will not affect local sales taxes on groceries, and the total elimination of the grocery tax will reduce annual state revenues by about $500 million.

Aude Negrete, executive director of the Kansas Hispanic and Latino American Affairs Commission, praised the governor for remaining engaged on issues of importance to the state’s Latino population.

“An extra $500 per year will go a long way to helping our families buy the food they need to keep their kids healthy and it’s an accomplishment that will impact everyone — both Latino and non-Latino,” Negrete said.

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.
See more at https://kansasreflector.com/2022/06/13/reducing-food-sales-tax-benefits-latino-communities-kansas-governor-says/

Kelly goes shopping for sweet food sales tax repeal, settles for gradual reduction

Bill to be signed by governor ends 6.5% state tax on groceries in 2025

by Tim Carpenter, Kansas Reflector

Olathe — Gov. Laura Kelly planned a trip to a Hy-Vee store in Olathe to sign a bipartisan bill Wednesday phasing out over three years the state’s 6.5% sales tax on groceries, but would prefer the Legislature reconsider her proposal to promptly wipe out the state tax on groceries.

The Republican-led Legislature is sitting on a large budget surplus, but has been wary of wholesale deletion of the state’s tax on food on July 1 because it would be a political victory for the Democratic governor and the lost state revenue could haunt lawmakers in a recession. The governor has campaigned to “Axe the Food Tax,” which would be popular among consumers grappling with the highest inflation rate in decades.

Instead, the House and Senate overwhelmingly approved a bill that would culminate with repeal of the state’s food sales tax in 2025. The reform wouldn’t alter local sales tax on grocery purchases.

Under House Bill 2106, the state would lower the state’s sales tax on groceries to 4% on Jan. 1, 2023. It would slide to 2% by Jan. 1, 2024. The tax would be eliminated Jan. 1, 2025. The first phase of the rollback would cost the state $77 million. The second year revenue reduction would be an estimated $252 million, followed by $411 million in 2025.

Gov. Kelly referred to the Legislature’s alternative to her plan as a “good first step,” because it would deliver savings for every Kansan. She said strong state tax revenue collections in April demonstrated the Legislature could take up the issue May 23 when legislators return to Topeka.

House Majority Leader Dan Hawkins, R-Wichita, said an extreme downturn in the state’s economy had to be anticipated. The stair-step process of lowering the sales tax on groceries would allow the Legislature to remain nimble, he said.

The bill to be signed by Gov. Kelly defined food as standard groceries as well as bottled water, candy, dietary supplements, soft drinks and food sold through vending machines. It excluded alcoholic beverages, tobacco and prepared food offered by restaurants.

The unusually high statewide sales tax on groceries was raised to 6.5% in 2015. It was bumped up to help balance the budget because former Gov. Sam Brownback’s strategy of aggressively lowering the state’s income tax — his goal was to eliminate that tax in Kansas to create job growth — depleted the state treasury to an extent it was difficult state government to fulfill basic duties.

In 2019, Republicans in the Legislature passed two tax-cut bills vetoed by Gov. Kelly. GOP lawmakers attempted to induce Gov. Kelly to approve of the cuts by inserting a reduction in the state food sales tax. Gov. Kelly rejected the legislation, saying it would have been irresponsible to add financial instability to the budget.

Derek Schmidt, the attorney general and a candidate for governor in 2022, said the latest phased approach to the sales tax on groceries was Gov. Kelly’s “second chance to get it right.”

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.
See more at https://kansasreflector.com/2022/05/11/kelly-goes-shopping-for-sweet-food-sales-tax-repeal-settles-for-gradual-reduction/

Kansas Senate backs gradual elimination of sales tax on food by 2025

Democrats push for immediate elimination

by Noah Taborda, Kansas Reflector

Topeka — A Kansas bill providing a multiyear, staggered elimination of the state sales tax on food moved a step closer Wednesday to becoming law.

Kansas’ current sales tax on food is 6.5%, among the highest in the nation, and for years has been among top reform issues for Gov. Laura Kelly, legislators and advocates. But despite the bipartisan support for the change, Republican leadership in the Kansas House and Senate did not entertain a debate during the regular session.

On Wednesday, Senators for the first time debated the issue on the floor, approving a compromise between both chambers without opposition. The plan would take a year-by-year approach to scale down the food sales tax, dropping from 6.5% to 4% on Jan. 1, 2023, then 2% the following year and eliminating the tax altogether in 2025.

While the vote was 39-0, Democrats argued the Legislature should eliminate the sales tax entirely or begin the reduction in July. Senators rejected an effort by Sen. Tom Holland, D-Baldwin City, to force a debate on a plan proposed by Kelly to eliminate the tax immediately.

“This is not a stunt. This is to get some immediate food sales tax relief to people now,” Sen. Holland said.

House Democrats also tried to force a debate on the governor’s plan with a similar approach but lacked the votes to support the procedural action.

Republicans argue the phased in approach is more fiscally responsible, but Democrats called it a political move aimed at denying Kelly something positive in an election year. The House could take up the bill on Thursday. Kelly hasn’t indicated if she would sign it into law.

Sen. David Haley, D-Kansas City, Kansas, said many people in his district go to Missouri for large purchases, hurting Kansas grocery stores and other vendors.

“I’m sure each of you can talk about some wins in your district, but I don’t know what else to tell them we have done this year that affects us this year,” Sen. Haley said.

Democrats voted in favor of the bill while pointing out the Legislature was not capitalizing on a rare budget surplus and an increasingly optimistic revenue projection.

Sen. Caryn Tyson, R-Parker, expressed frustration with how long it took to get several tax policy items approved but said the approach to cutting the food sales tax over three years via House Bill 2106 wasn’t political. She said immediately lowering the tax to zero was unrealistic and did not provide enough time for vendors to prepare.

“If it was the Tyson plan, we would have had food sales tax done in 2012,” Sen. Tyson said. “I’m going to take what I can get. It’s not perfect, but we’re going to get this issue started and get it going in the right direction for Kansas consumers.”

Sen. Tyson and other Republicans frequently point out that Gov. Kelly vetoed a bill in 2019 that would have eliminated the food sales tax over several years. In her veto message for that measure, which included tax breaks for multinational corporations and other tax changes, Gov. Kelly said she would sign a thought out policy but not a rushed attempt with tax cuts Democrats viewed as harmful to the state’s bottom line.

Attorney General Derek Schmidt, Gov. Kelly’s presumptive GOP gubernatorial opponent, said in a news release earlier this week he would have signed the bill. Schmidt has supported a plan to reduce the sales tax on food and saw this year as a prime opportunity to pass the tax cut.

“In this time of raging inflation, this tax relief will bring much-needed help to so many Kansans throughout our state,” Schmidt said following the Senate vote. “After repeated false starts in years past, now is the time to finally get this done, and I urge the House of Representatives to pass this as well before adjourning this week.”

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.

See more at https://kansasreflector.com/2022/04/27/kansas-senate-backs-gradual-elimination-of-sales-tax-on-food-by-2025/