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Axe The Food Tax: Eliminating Sales Tax On Groceries In Kansas



Axe The Food Tax: Eliminating Sales Tax On Groceries In Kansas

Kansas Gov. Laura Kelly announced in November her plans to introduce a bill to the Kansas legislature to “Axe the Food Tax” and completely eliminate sales tax on groceries in the state. Her plan is for the bill to be introduced during the 2022 legislative session.

Kansas is currently one of just seven states in the U.S. that fully taxes groceries. The current grocery sales tax rate is 6.5%, the second highest in the nation.

Keep reading to learn more about why the governor wants to axe the food tax and what this will look like for Kansas citizens.

The Negative Side Effects Of Grocery Sales Tax

While a grocery sales tax can lead to economic growth and more money for the state government, there can be negative effects for the citizens, specifically those in lower economic classes.

Sales tax on groceries can cause harm to citizens in the lowest income bracket since they usually spend more of their income on groceries to eat at home than higher income individuals and families.

According to an article from the Center on Budget and Policy Priorities, “The lowest-income fifth of families spend almost twice the share of their annual income on food at home that the highest-income fifth do: 10.3 percent versus 5.7 percent.”

study titled, “Putting grocery food taxes on the table: Evidence for food security policy-makers” found that states with a grocery tax tended to have a higher food insecurity rate.

While 10.9% of Americans are food insecure, 12.1% of Kansans are food insecure. The rate among Kansas children is 17.1%, while the national average is 14.6%.

Another study published in the Health Economic Review highlights the relationship between grocery sales tax and obesity, specifically throughout the pandemic. They estimate that the increased financial burden of obesity and diabetes rates resulting directly from grocery taxes is about $5.9 billion.

Also, though it may seem like getting rid of the grocery sales tax would lead to less money for the state, many people who live near the border in Kansas currently cross over to Missouri, Colorado or Nebraska to buy their groceries to avoid Kansas’ high grocery tax, leading to less money being spent in the state. The new “Axe the Food Tax” legislation will help put an end to that, resulting in higher sales for companies that sell food in Kansas.

Kansas Governor’s Plan For The State

Due to the negative aspects of a grocery sales tax, Gov. Kelly has stated she wants to completely remove the tax on foods in Kansas.  With this cut the average four-person Kansas household should be able to save $500 or more a year.

Kansas lawmakers from both parties welcomed new revenue forecasts that project a $2.89 billion surplus to the state general fund as evidence the state can afford to exempt groceries from the state sales tax.

Gov. Kelly agreed that removing grocery sales tax shouldn’t have too much of an effect on the state’s budget.

“Thanks to the fiscally responsible decisions we made before and during the pandemic, we can cut the food sales tax and keep Kansas’ budget intact.”

Have a question? Contact Monika Miles.

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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One thought on “Axe The Food Tax: Eliminating Sales Tax On Groceries In Kansas

  1. Prof Desmond Kruger says:

    While it is irrefutable that indirect taxes (sales tax and VAT/GST) impact the lower income earners more than those in the higher income brackets, it is also irrefutable that providing an exemption (sales tax) or zero rating (VAT/GST) is extremely inefficient. The Davis Tax Tax Commission in South Africa has done work in this area (as have previous tax commissions) and concluded that it is far more efficient to collect the taxes and then have targeted relief measures to assist those unable to afford food and other basics. A person who is unable to afford food or basics will not benefit from an exemption/zero rating. As has been demonstrated, in relation to certain food types, the rich benefit far more than the poor. The only reason, with respect, why governments provide across the board exemption of so-called basis foodstuffs is political expediency (Prof Des Kruger, Webber Wentzel, South Africa – des.kruger@webberwentzel.com)

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