Idaho fixed one problem with the state’s tax policy when a special session of the Legislature removed the school-funding burden from the property tax.

Now, it appears the state has the will and political leadership to tweak the historic legislation further, to help those on lower incomes by targeting the sales tax on food. In August, the Legislature provided $260 million in property tax relief by raising the sales tax 1 cent and tapping surplus revenue to replace funding for school maintenance and operation costs. The sales tax increase, from 5 cents to 6 cents, applies to food purchases, too, of course.

That’s an extra $1 in taxes for $100 worth of groceries, an extra $200 for a $20,000 car. That’s also an extra $144 for the average Idaho family of four, according to the 2005 District of Columbia Nationwide Comparison of Tax Rates and Tax Burdens. For most, particularly the rich and those who obtained significant property tax relief from the special session, that’s not much money. For those struggling on fixed or lower incomes, the extra penny is felt.

When the Legislature convenes in January, two proposals may be on the table – one from current Gov. Jim Risch, who calls for phasing out the tax on food altogether, the other from Gov.-elect Butch Otter, who’d rather target tax relief to the poor by raising the grocery credit on the state income tax. Either plan would be a marked improvement over the current system. Risch’s plan would blow a hole of more than $155 million in the budget. Otter’s plan is more targeted and complicated. However, Risch’s plan does something that Otter’s doesn’t: It eliminates a regressive tax on an essential product: food. It also provides relief where it’s most needed by low-income Idahoans – in the checkout line. Otter’s plan makes them wait until the end of the year to collect an income tax refund.

Idaho is one of nine states that fully taxes groceries. Six states tax groceries at a reduced rate. Thirty states, including Washington and the District of Columbia, exempt groceries from the sales tax entirely. Idaho is one of five states that offer a grocery tax credit.

In a clash of ideas after the Nov. 7 election, Otter said he’d rather see an increased grocery credit aimed at the state’s most vulnerable residents, rather than individuals like himself who were well-off or out-of-state visitors. Economists agree that eliminating the sales tax on groceries would provide a bigger tax break to the wealthy than the poor because rich people generally spend more on food.

State Reps. Frank Henderson, R-Post Falls, and Bob Nonini, R-Coeur d’Alene, are working on legislation that would raise the grocery tax credit from $20 per person and $35 per senior citizen to around $100 per person. A family of four would recoup its extra penny of sales tax for food and much more. An increase of that much in the grocery credit would help wean Idaho from the luxury of collecting sales tax on food.

Risch hinted that the sales tax on food can be eliminated without raising taxes by taking advantage of Idaho’s robust economy.

In the five months since he became governor, Risch has corrected a long-standing problem by spearheading property tax reform. His reform was embraced at the polls this month when 72 percent of voters backed property tax relief. Otter’s plan provides some relief. Risch’s plan deals with the problem completely.