Initial confusion about the precise tax effects of undoing Gov. C.L. “Butch” Otter’s veto of House Bill 67 have been cleared up by a senior senator.
House Bill 67, which repealed both the sales tax on groceries and the grocery tax credit, passed with supermajorities in both the House and Senate, but was vetoed after the end of the session. Thirty representatives and senators have joined a lawsuit initiated by Rep. Bryan Zollinger, R-Idaho Falls, and Rep. Ron Nate, R-Rexburg, which claims the veto was filed too late. A victory will require the Idaho Supreme Court to reverse standing precedent.
If the veto is thrown out, the credit would be repealed effective Jan. 1, 2018, while the exemption of groceries from the sales tax would take place June 1, 2018. So that means at least five months where taxes would be higher than if repeal didn’t go through.
The uncertainty surrounded 2017 income taxes. Income tax returns for 2017 won’t be filed until early 2018, a time when the tax credit will be repealed. But would Idaho taxpayers still be able to claim it? If not, that would mean 17 months of higher taxes.
Senate Pro Tem Brent Hill, R-Rexburg, is a certified public accountant and certified financial planner who regularly prepares his clients’ taxes. Hill said in a phone interview that because the credit is in place for 2017, taxpayers will still be able to claim it on the tax returns they file in early 2018.
The upshot is that the temporary period of higher taxes that would result from a reversal of Otter’s veto, when the grocery tax credit is no longer in law but the grocery tax remains, would last five months, not 17.
In order for the net effect of the repeal of the grocery tax and the grocery tax credit to be a tax cut in later years, a family would have to spend about $1,700 per person per year on groceries — specifically on groceries that qualify for purchase using Supplemental Nutrition Assistance Program benefits. This includes most common types of food, and even seeds and plants that produce food. But it doesn’t include items such as alcoholic beverages, vitamins, medicine, soap, certain energy drinks or hot foods.
Reporter Bryan Clark can be reached at 542-6751.