Otter signs grocery tax credit legislation

BOISE – Idahoans still will pay a 6 percent sales tax whenever they buy groceries, but now they’ll get more of that money back later – especially if they’re poor.

Gov. Butch Otter on Monday signed into law an increase in the state’s grocery tax credit from the $20 per person, to $30 for most Idahoans and $50 for the low-income.

“I believe it’s got the money the quickest to the folks that need it the most,” Otter said after he signed the bill, HB 588.

The new law, which takes effect for the 2008 calendar year, also calls for $10-a-year increases in the credit in subsequent years, state budgets permitting, until it hits $100 a year for everyone. According to state estimates, that’s roughly what Idahoans spend on sales tax on food each year.

An audience of anti-hunger advocates applauded the signing.

“I think it’s a good step in the right direction,” said Bishop Michael Driscoll of the Roman Catholic Diocese of Boise. “I think any time we do programs, especially for the poor, it shows the compassion and the mercy of people in this state. We should be known by our compassion and care for others, especially in things so basic as hunger.”

In addition to raising the credit, the measure ends Idaho’s distinction as the only state that excludes the poor from its grocery tax credit. Under current Idaho law, those who make less than the threshold for filing income tax returns – $17,500 for a married couple filing jointly – are ineligible for the credit unless they’re elderly, blind or disabled veterans. Under HB 588, those Idahoans could get the credit by filing a simple form.

Otter called that change “very significant.” He said, “There’s a lot of people, for instance like my 93-year-old mother, that does not file income tax, but still pays the sales tax on food. Why shouldn’t those people get relief?”

Because the law is retroactive to Jan. 1, 2008, it will take effect for the current tax year, meaning when Idahoans next year file their 2008 income tax returns, they’ll get the higher credit.

Lt. Gov. Jim Risch called the signing of the new law “a real matter of satisfaction for me.” Risch, as governor, led the move in August 2006 to raise Idaho’s sales tax from 5 percent to 6 percent. He said it was his intention then to also address grocery taxes, but there was no agreement on how to do it.

Last year, both Otter and lawmakers made addressing grocery taxes a top priority, but again, they couldn’t agree on how to do it. Otter insisted on giving relief to the poor, while lawmakers sent him a pricey across-the-board increase instead. He vetoed it, and nothing passed.

“After a year and a half, we finally have arrived at a compromise,” Otter said. “It took a while to get it cooked up.”