BOISE – As Idaho legislators spar with Gov. Butch Otter over whether grocery tax relief should be targeted to the needy or granted across the board, few realize that poor people are excluded from receiving Idaho’s current grocery tax credit.
Under Idaho law, anyone who makes less than $17,500 a year for a married couple, or $8,750 for a single person, doesn’t qualify for the credit, which is designed to partially offset Idaho’s sales tax on food.
“They don’t get it at all,” said Dan John, tax policy manager for the state Tax Commission. “It hasn’t changed for years.”
The only exceptions are for elderly people, blind people or disabled veterans.
Last year, both Otter’s bill to increase the credit for poor people and legislators’ alternative plan to increase the credit across the board – which Otter vetoed – would have changed that provision, opening up the credit for the first time to those too poor to meet income tax filing requirements. Either bill would have ended Idaho’s current distinction as the only state with a grocery tax credit that excludes the poor. But neither bill passed.
Sen. Joyce Broadsword, R-Sagle, vice chairwoman of the Senate Health and Welfare Committee, said she didn’t realize the poor were being excluded.
“We need to make sure that we address it this year,” she said.
Sen. Jim Hammond, R-Post Falls, said he assumed low-income people could apply for the credit, which now stands at $20 a person or $35 for those 65 or older.
“It’s something we need to fix, that’s for sure,” Hammond said.
Rep. Frank Henderson, R-Post Falls, said: “It’s embarrassing – it’s unfortunate.”
“I had hoped that between the sessions, negotiations between the governor and those who proposed another system of relief would have resulted in a compromise,” he said.
Instead, Otter in his State of the State message to lawmakers repeated the same proposal he made last year, to raise the credit from the current $20 to as much as $90 for the poorest Idahoans, but reduce or end it for those with higher incomes.
Legislative Democrats on Tuesday called instead for phasing out the sales tax on groceries in Idaho over the next six years.
“We think it’s an unfair tax,” said House Assistant Minority Leader George Sayler, D-Coeur d’Alene.
Thirty states, including Washington, exempt groceries from their sales taxes. Eight set lower sales tax rates for groceries, and five, including Idaho, offer credits to partially offset the tax. But Idaho’s credit is the only one that excludes low-income people from eligibility.
“I don’t know what they were thinking when it was originally passed,” Broadsword said.
The Idaho Hunger Relief Task Force, a statewide coalition of public and private charities, social welfare groups and faith groups, is trying to raise awareness of what it calls a “crucial flaw” in Idaho’s current grocery tax credit. The group also wants the credit made available to Idahoans who receive food stamps, because studies show food stamps cover only a portion of their food needs – so they’re still paying sales tax on groceries.
Kathy Reed, social service director at St. Vincent de Paul in Coeur d’Alene, said she didn’t realize poor people were excluded from the credit until she joined the hunger task force.
“This affects our target population – those are the people that need the financial help,” she said.
Reed’s organization provides shelters, food, rent and utility assistance, job counseling, and other services to poor people in North Idaho.
When she’s helping a poor family catalog its budget to apply for heating assistance, “I’ll ask, ‘What do you spend on food a month?’ It’s always, ‘Whatever’s left over.’ That’s at the bottom of the list,” Reed said.
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