House passes grocery tax break; plan sent to Senate

BOISE – The Idaho House voted 62-7 on Thursday to hand Idahoans a tax break in the form of a $30-a-year increase in the state’s grocery tax credit, sending the proposal on to the Senate.

House Bill 81 would increase the current $20 annual credit for everyone to $50, while the current $35 credit for seniors would rise to $70 a year. It also would make the credit refundable, so people who don’t make enough to have to pay income tax still could qualify. A House committee earlier voted to substitute the measure for a smaller, targeted grocery tax credit for the poor that Gov. Butch Otter had proposed.

“What we’re doing now is a compromise – it’s responsible,” the bill’s main sponsor, Rep. Cliff Bayer, R-Boise, told the House.

But others warned that the cost to the state – $47.5 million in lost sales tax revenue – is problematic.

“What does this bill get us? $50 or $70 in our pocket at the end of the year,” said Rep. Fred Wood, R-Burley. But he said the state has pressing needs, such as water issues, a nursing shortage, college scholarships and transportation. The economy has been booming but will turn down, he said, and Idaho should plan for that by socking away the money in reserve accounts.

If not, he said, “You’re not going to have any groceries to issue a credit on.”

Rep. Marv Hagedorn, R-Meridian, backed the bill, saying, “It’s a very good step in the right direction. … If the state has money to spend, it will be spent.”

Most North Idaho lawmakers supported the bill, but two, Reps. Jim Clark, R-Hayden Lake, and Phil Hart, R-Athol, voted against it. The two sponsored a competing bill in committee to phase out the sales tax on groceries entirely over four years.

Clark told the House he’d had more than 100 e-mails in favor of eliminating the sales tax on groceries.

Rep. George Sayler, D-Coeur d’Alene, spoke in favor of the bill, which he called “a good compromise bill.” Sayler said when the Legislature raised Idaho’s sales tax from 5 percent to 6 percent in August, it hit everyone, so everyone deserves relief. And the size of the credit in HB 81 “more than makes up for the sixth cent of the sales tax,” Sayler said.

Bayer said the new, larger credit would effectively cut the sales tax rate on food in half.

The measure now moves to the Senate’s tax committee.