BOISE — Idaho would raise its grocery tax credit to $135 for every Idahoan, of every age, every year, under legislation that cleared the House Revenue & Taxation Committee Monday with just two “no” votes.
The two dissenters were Reps. Tammy Nichols, R-Middleton, and Priscilla Giddings, R-White Bird.
The current grocery tax credit is $100 per person, and $120 for those age 65 or older. It is refundable, meaning even those who don’t owe income taxes, and wouldn’t otherwise need to file income tax returns, can file and receive the credit as a refund against sales taxes they’ve paid on groceries during the year.
“Moving it to $135 effectively removes the effects of sales tax on food for nearly all Idahoans,” House Speaker Scott Bedke, R-Oakley, the lead sponsor of the bill, told the committee.
Giddings said, “I think giving money back to people, $35 per taxpayer, is really a noble cause. Unfortunately, just because it’s a noble cause doesn’t mean it’s a good policy decision.” She said, “A good policy decision doesn’t redistribute wealth, and to me this is not a good policy decision. Unfortunately this is a Bernie Sanders plan that’s going through Idaho, and I can’t support that.”
Bedke told the panel, “This is not a way to shift money or send money back, but a way to negate the effects of sales tax on food with a tax credit.”
Nichols said she worried that raising the credit would “give an advantage for people on food stamps.” However, those on food stamps don’t qualify for the credit. Idahoans who receive food stamps, also known as SNAP benefits, for part of the year get a pro-rated credit.
Nichols also said she worried about the cost to administer the credit. “I want to know if it’s an efficient process,” she said.
Rep. Robert Anderst, R-Nampa, said the credit is in place now, and increasing its amount wouldn’t raise administrative costs.
Rep. Rod Furniss, R-Rigby, said, “I just don’t know of very many taxes and credits that help a large family, and I kinda like that system, where a large family is being helped.”
Bedke confirmed that. “The beauty of this is … if the family is one or the family is 10, the math is a linear relationship.” That means a family of four would get four times the $135, or $540 each year; a family of 10 would get 10 times the $135, or $1,350 a year.
Two members of the public testified on the bill, both in support. Russ Hendricks of the Idaho Farm Bureau Federation said his members worry that if Idaho were to just exempt groceries from the sales tax, like most states do, there would be “the potential for an increased bureaucracy to try to determine what exactly is a food item. Under the current sales tax credit, every consumer gets to decide what is a food item to them.”
Julie Page of Boise said, “The credit does nothing for the fact that when you go to the grocery store and you spend money, you don’t have that 6% in your pocket.” But she noted that the committee has declined to introduce bills to eliminate the sales tax on groceries. “Short of that, increasing the credit will help … everybody,” she said.
Rep. Rob Mason, D-Boise, said, “I’m not sure this is the perfect answer to the grocery tax issue. However, we have this tax relief fund money sitting in a pot, and there’s not a whole lot of viable solutions that I’ve heard come before this committee to get this money back to the taxpayers. I really don’t want to sit on it for a year thinking of more ideas. … I think it’s a good way to move forward with the tax relief fund.”
The increase in the credit would be funded from tens of millions now sitting in a fund set aside for future tax relief, where sales tax proceeds from online sales have been directed since the fund was created last year. Bedke estimated that the increase would require $48 million to $49 million a year from the fund, which currently is collecting close to $7 million a month. The bill, HB 494, is co-sponsored by all four members of House Republican leadership.
To become law, it still would need passage in both houses and the governor’s signature.