Lawmakers introduce grocery tax credit
BOISE – Much-anticipated grocery tax relief legislation was introduced in the Idaho Legislature on Wednesday, but hopes that it represented a compromise with Gov. Butch Otter were immediately dashed.
Otter’s press secretary, Jon Hanian, said, “The governor says we have not reached a compromise. Our position remains the same.”
The one concession the new bill makes to Otter’s desire to target relief to the neediest Idahoans is to make a larger grocery tax credit available to those who earn $1,000 per year or less in Idaho taxable income. With standard deductions and personal exemptions, that equates to a family of four earning gross income of $25,300 or less.
Otter’s bill last year gave increased credits for those earning up to $50,300 for a family of four, but above that income level, the credit phased out.
State Rep. Eric Anderson, R-Priest Lake, one of the bill’s 19 co-sponsors, said, “It’s a number. I think it’s more of an effort to conform to some of the desires of the governor’s philosophy and at least have a starting point to assist the people that are most in need.”
Said state Rep. George Eskridge, R-Dover, another co-sponsor, “We’re trying to put together a bill that we can afford in today’s climate and still get something done.” He added, “That’s better than nothing – last year we didn’t get anything done.”
Idaho is one of just seven states that fully applies its sales tax to groceries. In an August 2006 special session, Idaho lawmakers raised the state’s sales tax from 5 percent to 6 percent in order to fund property tax relief. Last year, a top priority for both the governor and Legislature was to give Idahoans a break from that new, higher tax on groceries – but they couldn’t agree.
Otter vetoed legislation that would have granted a big across-the-board increase in Idaho’s grocery tax credit, holding out for his proposal to give a much bigger credit to low-income people, but phase the credit out for those with higher incomes. In the end, neither passed.
The current annual grocery tax credit is $20 per person and $35 for those over age 65. But the state estimates Idahoans now spend five times that in sales taxes on groceries.
The new legislation, jointly crafted by state Rep. Cliff Bayer, R-Boise, and state Sen. Russ Fulcher, R-Meridian, would boost the grocery tax credit next year to $55 for those who make $1,000 or less a year in Idaho taxable income, $30 for everyone else and $50 for those over age 65. The following year, the credits would rise to $75 and $40, and in the third year, they’d rise to $90 and $50. Eventually, the distinction between the low-income credit and the regular credit would be erased.
The plan would cost the state budget $23.8 million next year – roughly equal to the cost of Otter’s proposal last year – with the costs rising in each subsequent year.
The bill also makes Idahoans who don’t earn enough money to be required to file income tax returns eligible for the credit. They’re now excluded.
State Rep. Frank Henderson, R-Post Falls, another co-sponsor, said, “Our real ambition is to repeal the whole thing, but we know we can’t get that done. So this is the next best thing.”
Said Eskridge, “We all have a problem with the sales tax on food. Food is a real necessity to everyone, and it seems immoral almost to tax food.”
The bill’s other North Idaho co-sponsors include Reps. Bob Nonini, R-Coeur d’Alene, and Marge Chadderdon, R-Coeur d’Alene; and Sens. Shawn Keough, R-Sandpoint; John Goedde, R-Coeur d’Alene; Joyce Broadsword, R-Sagle; and Jim Hammond, R-Post Falls.