Kansas Democratic Gov. Laura Kelly and Republican Attorney General Derek Schmidt both want lawmakers to cut the state’s food sales tax — one of the nation’s highest at 6.5% — raising hopes the idea will finally become a reality after years spent in political purgatory.
The two officials are expected to face each other in the 2022 governor’s race, leading to a potential race between the two parties to deliver — and take credit for — what would likely prove a popular policy.
Year after year, legislators have grappled with proposals to reduce or end the tax. Invariably, the plans become ensnared in larger political fights.
Kelly, who has long supported cutting taxes on food, vetoed a 2019 tax bill that included a gradual reduction tied to revenue growth but also came with costly provisions that would have held down corporate taxes. Earlier this year, Republicans opposed a Democratic amendment to create a food sales tax rebate during debate on a tax bill.
But Kelly and Schmidt are now both moving past half-measures and calling for its elimination or, according to Schmidt, at least a significant reduction.
“This tax cut will put money back in Kansans’ pockets and create real savings for those who need it most,” Kelly said Monday at a Dillons in Topeka, promising to put forward legislation to eliminate the state sales tax rate on food.
Kelly dubbed her effort “axe the food tax” and held aloft a small hatchet as curious shoppers walked by. Fully eliminating the tax would save a family of four an average of $500 a year, her office said.
The announcement came after Schmidt sent a letter on Friday to legislative leaders asking them to take action. Writing to Senate President Ty Masterson and House Speaker Ron Ryckman, Schmidt said the Legislature needs to give renewed attention to “this vital tax relief” during the 2022 session that begins in January.
“Our state must be an affordable place to live, work, and raise a family. In light of the state’s current budget situation, carefully-constructed tax relief that benefits all Kansans by eliminating or at least significantly reducing the sales tax on groceries is possible, necessary, and overdue,” Schmidt wrote.
Karen Thornwall spends about $100 a week on groceries to feed her family. The 61-year-old Topeka resident, who caught part of Kelly’s speech as she shopped, is tantalized by the prospect of Kansas lawmakers finally eliminating the tax.
“Every little bit helps,” said Thornwall, who calls herself an independentand voted for Kelly in 2018. “Just to know that somebody is working for the little guy and the middle class citizen who doesn’t seem to benefit from all these programs that we’re seeing now.”
The food tax has long been a prime target of anti-poverty activists and advocates for children, who say the extra dollars and cents tacked onto each purchase are one of the most regressive forms of taxation. Lower-income individuals spend a larger percentage of their paychecks on groceries relative to high earners.
The tax rate has ticked up over time, from under 5% in the 90s to 6.5% today. Recent increases have come in response to the budget problems caused by the Great Recession and income tax cuts enacted under Gov. Sam Brownback.
Eliminating the tax on groceries is estimated to cost upwards of $400 million a year. But Kansas is flush with cash at the moment, aided by large infusions of federal COVD-19 relief dollars and consistently better-than-expected tax collections.
In the first four months of the fiscal year, which began in July, Kansas has already collected $438 million more than projected, or roughly enough to pay for the elimination of the food tax for a full year. State revenue forecasters will meet Wednesday to produce new projections that could include even more additional revenue.
“With strong revenue projections that could lead to a historic ending balance for the state, now is the time to eliminate the state-level food sales tax,” John Wilson, president of Kansas Action for Children, said in a statement.
“Kansans have experienced one of the highest sales taxes on food in the country for years, a consequence of previous poor state tax policy,” Wilson said. “Now that Kansas has recovered from that policy and has stable revenue, it’s time to invest in Kansas workers and their families with this commonsense policy that has long had bipartisan support.
Some legislators believe Kelly and Schmidt turning the tax into a campaign issue will ratchet up pressure on the Legislature to act. Kelly and other Democrats want the Legislature to pass a “clean” bill without added provisions.
Rep. Adam Smith, a Weskan Republican who chairs the House Tax Committee, said the focus by Kelly and Schmidt on the food tax could help keep the issue from becoming entangled with other measures.
“The one thing that I do like about this is that if it has some good momentum, it’s probably something they don’t want to wait until the end of session to do,” Smith said.
Democrats on Monday were hopeful election-year politics would actually help the prospects for action.
“I think the election makes it an arms race that only benefits Kansans,” said Rep. Rui Xu, a Westwood Democrat.