Committee sends grocery tax bill to Senate

BOISE – Grocery tax relief could be on the way for Idahoans.

A state Senate committee signed on Tuesday to a House-approved bill that would raise the state’s grocery tax credit, which has been the subject of political fights for the past two years.

Senators wanted to amend the legislation, which raises Idaho’s per-person annual grocery tax credit from $20 to $30 next year for most, and to $50 for the poor. But opponents of that move said any monkeying with the bill would result in a repeat of last year – when despite being a top priority of both the Legislature and the governor, no grocery tax relief passed.

The Senate Local Government and Taxation Committee voted 7-2 to approve the measure and send it on to the full Senate.

“We’ve wrestled with this thing for two years,” said state Sen. David Langhorst, D-Boise. “I would far prefer that we just got rid of the grocery tax altogether. That doesn’t seem to be realistic this year.”

Idaho lawmakers met in a special session in August 2006 to raise the state’s sales tax from 5 percent to 6 percent in order to cut property taxes, and they promised then to do something about the fact that Idaho still applies its full sales tax to groceries. But the issue prompted a veto fight between Gov. Butch Otter and lawmakers last year, nothing passed, and Idahoans still pay 6 percent sales tax on all their grocery purchases.

The misgivings in the Senate committee Tuesday weren’t about the increase proposed for next year. Instead, they focused on the bill’s provision for subsequent, $10-per-year increases in the credit, economic conditions permitting, until it hits $100 for everyone. That’s how much the state estimates Idahoans spend on sales tax on food.

The Senate committee, before considering the bill, went over five-year state revenue projections they’d requested from the Legislature’s budget office. Those showed that Idaho likely can’t afford both the future increases the grocery tax bill lays out, and the proposed $100 million-plus phased-in tax break that businesses want through the repeal of the personal property tax.

That measure has been delayed in the House due to legal questions; the new projections could dim its prospects.

Otter’s chief economist, Mike Ferguson, attended the hearing but didn’t speak. Asked afterward about the projections, he said the state’s revenue outlook for the coming five years is difficult to predict. “Right now, the one dominant characteristic of the economy is turmoil,” he said.

There was mostly favorable testimony last week at a public hearing on the grocery tax bill. But several anti-hunger advocates said they wished the measure didn’t exclude people who receive food stamps from the credit, because food stamps don’t generally cover poor families’ entire food costs.

“While I continue to have concerns about excluding those on food stamps, I urge you to move this piece of legislation forward,” said Ruth Schneider of the Idaho Interfaith Roundtable Against Hunger. “This is a concrete step we can take for addressing hunger in Idaho.”

Anti-hunger advocates were especially pleased with a provision of HB 588 that would end Idaho’s distinction as the only state that excludes the poor from its grocery credit. Under current Idaho law, people who don’t make enough to be required to file income tax returns – $17,500 for a married couple filing jointly – are ineligible for the credit.

Hill praised those who testified, many of whom said they’d prefer to have no tax on food, but recognized that the state can’t afford that this year. Last year, Hill said, many people urged the panel to take the sales tax off groceries entirely rather than increase the credit.

“That wasn’t one of the options we had,” he said. “As you all know, we walked away without anything.”

The bill now moves to the Senate for final passage. If it passes there, it goes to Otter, who has hinted he’ll likely sign it.