Bill to eliminate taxes on groceries could cost local cities

A bipartisan attempt to eliminate the state sales tax on groceries purchased in grocery stores appears to be stalled in the Missouri Legislature. That’s a relief to some who say the taxes fund local communities and state services.

A standalone bill to eliminate the state portion of the grocery sales tax, sponsored by Sen. Mary Elizabeth Coleman, R-Arnold, was approved by committee last month but has yet to be placed on the Senate’s debate calendar. “I’m not as confident that that will have a path forward,” she told the “Missouri Independent.”

Six bills in the House have been filed to eliminate the grocery sales tax, but none has been assigned to committee. Proponents successfully added the grocery tax proposal as an amendment to an unrelated bill two weeks ago in the Senate. But last week, after the estimated cost of eliminating the tax was determined, the bill’s sponsor demanded it be removed, effectively derailing both measures.

Eliminating the tax would cost Missouri an estimated $1.3 billion in local funds generated by cities and $200 million in state funds annually, beginning in fiscal year 2025. Sen. Lincoln Hough, R-Springfield, raised concern about the price tag, arguing during the Senate debate that the Legislature’s income tax cuts negotiated last year would provide similar help to low-income families.

“This is going to be an interesting litmus test as to whether or not the majority of the (Senate) still continues to believe that we need to be lessening the tax burden more holistically, or if we’re starting to say maybe enough is enough,” Hough said,.

Coleman, who proposed similar legislation in the House last year, said taxing essential items such as food poses an inordinate cost to the lowest-income consumers. “I don’t think that the taxpayer is wanting us to tax food,” she said. “I really don’t believe that.”

Take-home grocery food items in Missouri are taxed by the state at a rate of 1.225 percent, which goes mainly to a fund for public schools. Localities levy additional grocery sales taxes at varying rates, which can add up to 8 percent.

Pat Kelly, executive director for the League of Municipalities, said some cities in Missouri could be in jeopardy of bankruptcy if the bill passes. That would be due to future payments that need future revenue to cover the cost.

“I would argue that food is a necessity,” Coleman said last month. “And I find taxes that are essential items are some of the most regressive, harming the poor and not the way to fund our state government.”

States that have eliminated taxes on food have raised taxes and fees on other purchases to make up for the deficit.

Kansas is eliminating taxes on food over several years beginning this year but considering raising taxes on other items to fill the revenue gap.

–Dwight Widaman | Metro Voice