On Jan. 1, 2023, Kansas’ state sales tax on food items in the supermarket lowered from 6.5% (the second-highest rates in the country) to 4%. Most Kansans saw immediate savings; however, it is complicated and the largest retailer in the state didn’t even get it right the first day.
There’s a reason implementing this tax cut was tricky. Last year, Republicans and Democrats compromised to pass a bill that eliminated the state sales tax on food items through a stair-step approach, gradually knocking a few points off the state food sales tax rate until it hits zero in 2025.
It was a solution to a problem that every Kansan faces — too high of a tax at the grocery store. In addition, the food prices in the stores have increased and consequently, their tax on those higher prices has risen as well. The inflation rate of the producer price index has negated the small decrease in the KS food sales tax.
Now, Gov. Kelly is wanting to solve that problem by immediately axing the tax — no waiting until 2025 — and expanding the tax cut to include other everyday necessities like diapers and feminine hygiene products. The Legislature should heed her call, represent their constituency and make this their top priority this session. As the president and CEO of the Retail Grocers Association, I hear from grocery store owners across Kansas, and they are unanimous in wanting this to pass immediately.
First, axing the tax in one fell swoop will help us avoid what we saw earlier this year. Lowering tax rates is administratively complex, requiring store owners and our state government to spend time and money to get it right. Doing the stair-step approach means our businesses have to spend those resources again and again, leaving room for errors.
By the way, that’s also why we shouldn’t make this tax cut even more complex for stores to implement by only axing the tax on healthy foods and not others, as some have proposed. Let’s make this simple for small business owners and shoppers alike.
Second, moving up this tax cut would make Kansas grocery stores more competitive. For years, grocery stores near the state border have bled customers in search of lower prices to Missouri, Nebraska and Colorado. If the state sales tax on food, diapers, and feminine hygiene products is zeroed-out now, we’ll stop that trend in its tracks — and keep Kansas dollars here in Kansas. When they cross the state line, they (not unexpectedly) buy other items in other stores, restaurants and gas stations.
All the small businesses along the state borders get affected by this migration of these dollars.
And third, the state government can afford to do it. Thanks to good budgeting over the past four years, Kansas now has built up the biggest surplus in state history, and our leaders must decide how to spend it. In my opinion, it should be on tax cuts that are fiscally responsible and that help every single Kansan. What helps Kansas families more than a tax cut in supermarket purchases on food, diapers, and feminine hygiene products?
Last year, Kansas legislators took a big step forward by bringing both political parties together to put money back in Kansans’ pockets. Let’s finish the job we started by making that tax cut immediate — and as easy and straightforward as possible.
In this extreme inflationary period, it is time to help the everyday family save money on their food, diapers, and hygiene products. It is time to help Kansas grocers compete with out-of-state retailers and keep the dollars in Kansas.
About the author: Jon McCormick is president and CEO of Retail Grocers Association of Kansas and Missouri.
