House committee rejects compromise on grocery tax

BOISE – After a two-hour hearing, an Idaho House committee Monday rejected what many hoped would be compromise legislation to provide more relief to Idahoans from the state’s current 6 percent sales tax on groceries.

Most of those who testified at the hearing said rather than the bill’s complicated mechanism to ratchet up the state’s existing $20 per person annual grocery tax credit, they preferred to see the sales tax taken off food entirely.

“I believe that there’s an elephant in this room and you’re only addressing the toenail of this creature,” retired salesman Roland Wolfe, of Boise, told the House Revenue and Taxation Committee. “The real issue is whether we should have a grocery tax or not.”

“I always thought there was just something wrong about taxing something as essential as food,” Laurie White, a 20-year Boise resident, told the panel.

The committee voted 10-8 to kill HB 439, with all five of the committee’s Democrats joining five Republicans to oppose it. Every North Idaho member of the panel voted to kill the bill.

“It was the right thing to do,” said state Rep. Jim Clark, R-Hayden Lake. “If that would’ve gotten out of here, we wouldn’t see any other options whatsoever.”

Clark called the complex bill “an accountant’s full-employment bill,” and said, “We will get a different and a better bill out of this.”

State Rep. George Sayler, D-Coeur d’Alene, said, “We have other options we should be considering.”

Those include legislation sponsored by House Democrats to phase out the sales tax on groceries by a penny a year over six years.

In the first year, the current grocery tax credit would be eliminated, offsetting the cost to the state budget and meaning the bill would have no impact on next year’s bottom line for the state budget.

Clark is backing legislation to phase out the tax in four years. And Gov. Butch Otter has been calling for a much larger, targeted grocery tax credit aimed at Idaho’s lowest-income residents, while phasing out the current credit for those with larger incomes.

House Tax Chairman Dennis Lake, R-Blackfoot, said he’s expecting new bills – and already has received two. “To the best of my knowledge, the governor’s office will have a proposal” as well, he said.

He’s not set a date yet for the panel to consider new proposals.

Fifteen people testified at the hearing. Eight opposed the bill and called for removing the sales tax on groceries entirely.

Three backed the bill as-is, and four others favored it but wanted an amendment to let food stamp recipients get the credit; the bill excludes them.

State Rep. Cliff Bayer, R-Boise, lead sponsor of HB 439 along with 18 co-sponsors, urged the committee to support his proposal, which would have increased the current grocery tax credit from $20 to $30 for most people, and to $55 for families of four earning less than $25,300 a year.

The credit then would have increased in subsequent years according to an index, to eventually equal roughly what Idahoans pay in sales tax on food.

The bill also would have eliminated the current exclusion from the grocery tax credit for low-income Idahoans who make too little to have to file income tax returns. Bayer said that change accounted for half the first-year cost of the $23 million proposal.

The House Revenue and Taxation Committee includes three members of House GOP leadership, all of whom supported the bill. But they were outvoted.