LITTLE ROCK, Ark. (news agencies) — The number of states imposing sales taxes on groceries has shrunk over the years, and the number may decrease further in the coming months as lawmakers hear complaints about high prices for eggs and other household staples.
Arkansas Gov. Sarah Huckabee Sanders on Tuesday unveiled the details of her proposal to eradicate the remaining 1/8th of a cent sales tax the state levies on groceries. Lawmakers in Tennessee, Mississippi and Alabama and are also calling for grocery-tax reductions.
The efforts come as states face uncertainty about their budgets because of cuts in Medicaid and other federal programs being eyed by Republicans in Washington. But supporters of the tax cuts are citing headlines about soaring egg prices as the reason they are needed now.
“We’re getting rid of Arkansas’ most regressive tax and giving a helping hand to those who need it the most,” Sanders, a Republican, said at a news conference to discuss the proposal.
The number of states taxing groceries has decreased in recent years, with laws eliminating the state levy taking effect in Oklahoma and Kansas over the last year. A law eliminating Virginia’s tax on groceries took effect in 2023. A law eliminating Illinois’ 1% grocery tax is set to take effect next year.
State sales taxes are levied on groceries in nine states: Arkansas, Hawaii, Idaho, Illinois, Mississippi, Missouri, South Dakota, Tennessee and Utah. Hawaii and Idaho offer tax credits to residents to help offset the tax, though.
In Tennessee, Republican legislative leaders have proposed abolishing the state’s 4% sales tax on groceries. The legislation comes after the state’s handful of Democratic lawmakers have unsuccessfully introduced similar proposals as they argue that Tennesseans are paying as much as 6.75% in sales tax on essentials like bread and milk in some areas with local sales taxes.
However, it is unclear how far even a GOP-backed bill will fare in Republican-dominant Tennessee. State revenues are expected to be tighter this year, and Gov. Bill Lee didn’t include a cut in his proposed budget, nor did he include a grocery sales tax holiday that has typically been included in his legislative priorities.
House Majority Leader William Lamberth, one of the sponsors of the repeal, said the bill could be narrowed down to only apply to essentials hitting people’s pocketbooks the hardest rather than junk foods.
“Milk, eggs, bread, I mean, that’s a great place to start,” Lamberth said.
Alabama Democratic lawmakers plan to introduce tax cut legislation that will include eliminating the state’s remaining 3% grocery tax. Lawmakers in 2023 approved legislation to gradually drop it from 4% to 2%.
Democrats said families need relief.
“If we’re serious about helping working people get ahead, the best and most impactful way to do that is to take less in taxes and give them some peace of mind when they pay the rent or go to the grocery store,” Democratic Rep. Adline Clarke said in a news release.
Lawmakers have for decades have discussed removing the tax, but the proposals never came to fruition because of the loss it would cause to education funding.
A tax cut package moving its way through the Mississippi legislature would cut that state’s 7% sales tax on groceries.
Other grocery tax cut proposals have run into obstacles. South Dakota voters last year rejected a ballot measure that would have repealed the state’s grocery tax.
Arkansas had all but eliminated the grocery tax under Sanders’ predecessors, Democratic Gov. Mike Beebe and Republican Gov. Asa Hutchinson. All that remains is the 1/8th sales tax that’s applied under a voter-approved constitutional amendment for outdoors programs.
Eliminating that will cost Arkansas nearly $11 million a year, a figure Sanders said the programs can absorb.
Reducing or getting rid of grocery taxes can make a state’s tax system less regressive, but it comes at a time that states face the potential of additional costs because of federal budget cuts.
States could instead look at other cuts such as earned income tax credits or child care tax credits, said Aidan Davis, state policy director for the Institute on Taxation and Economic Policy.
United Arab Emirates Dirham Exchange Rate
