Lawmakers have endeavored to eliminate the tax on groceries in past years, only to be thwarted by former Gov. C.L. “Butch” Otter’s veto pen. Gov. Brad Little is a vocal supporter of the idea, giving hope that soon Idahoans won’t be taxed for this basic necessity.
While a tight budget will make it difficult, it’s important to note that funding shortfalls don’t mean you can’t eliminate the grocery tax. Instead of a net revenue cut, lawmakers could implement a revenue shift.
The grocery tax is uniquely bad because it taxes a basic life necessity, and because it means that those with very low incomes — who spend a bigger proportion of their money on food — have to devote more of their income to sales taxes. If lawmakers want to end that problem but can’t afford to lose the revenue, they could raise revenue in other places in the tax code.
According to the Idaho Center for Fiscal Policy, the Gem State had 136 different special tax exemptions as of 2015. In that year, they left $2.4 billion in tax revenue on the table through those carve-outs.
There are good reasons for many of those exemptions. But if lawmakers truly consider eliminating the grocery tax a priority, they should be able to find tax exemptions that are worth eliminating or reducing in order to pay for it.
It wouldn’t be a tragedy if this had to wait until next year, but lawmakers should at the very least build a solid consensus about what grocery tax repeal will look like. They can do this by resolving the trickiest part of the policy: figuring out what kinds of food, such as food from restaurants, will continue to be taxed instead of being counted as groceries. If they can come to an agreement on that, passage should be smooth sailing when this year’s tax collection problems are in the rearview mirror.