Our View: Food tax a burden

Idaho is one of only nine states that impose the full sales tax on food. It does, however, look the other way on the purchase of new manufactured homes, utilities, prescriptions, durable medical equipment, broadcast and publishing equipment and supplies, businesses and business assets and equipment and supplies used in manufacturing, among many other things.

Museum admissions also are exempt from the sales tax, as are many services, including those related to construction, agriculture and industry. Personal and business services aren’t taxed, either. Neither are repairs.

Idaho has 84 sales-tax exemptions and five more candidates are sitting in the desk drawer of state Sen. Brent Hill, R-Rexburg, who is the Senate’s tax chairman. At least $500 million isn’t collected because so many goods and services have been deemed sacred cows.

So why is it that food can’t attain exalted status in the eyes of legislators? For one thing, the sales tax on food raises a lot of money – even more now that the rate has been raised from 5 percent to 6 percent to finance a property tax cut. That change shined a spotlight on lower-income households, because they now have to pay more at the grocery store and are the least likely to benefit from the property tax break.

In response, lawmakers have introduced several proposals to limit the hit at the grocery store. After gnawing on the issue for several weeks, legislators are down to two options.

Gov. Butch Otter wants to raise the sales tax credit for households below a certain income threshold. He says raising the credit for everyone would be too costly. But the state Senate on Thursday defiantly passed an across-the-board tax credit increase that will cost $10 million more annually than Otter’s plan.

We think both measures miss an opportunity to eliminate the sales tax on food for good. Former interim Gov. James Risch offered a plan last fall that would have phased it out over six years. Taxing a necessity like food is regressive, unfair and even grotesque. Forty-one states are able to get by without it.

Of course, the big issue becomes replacing the revenue. For starters, legislators ought to take a serious look at the items that have been granted exemptions. Last Monday, the Senate passed a measure to do just that. Some exemptions are merited because they help raise revenue by attracting business activity. But lawmakers ought to consider whether small levies, rather than outright exemptions, are workable in some cases. Beyond exemptions, the state has other revenue-raising tools, including the income tax.

The problem with the current debate is that the possibilities have been narrowed to an argument over the size of tax credits, which struggling households must wait until year’s end to collect.

The reality is that the state will probably end up with some sort of bump in the tax credit. We just hope the state doesn’t consider this patch to be a permanent fix.