Kansas moves to phase out tax on groceries after election
A plan approved by the Republican-led Legislature would phase out the tax over three years, dropping it to 4% in January. Gov. Laura Kelly promised to sign the bill.
TOPEKA — Kansas moved late Thursday night to phase out the nation’s second-highest state sales tax on groceries.
But Republican lawmakers wouldn't have the state decrease consumers' bills until after Democratic Gov. Laura Kelly faces reelection in November.
Eliminating the 6.5% tax is Kelly's most visible legislative initiative this year, and she and fellow Democrats have been waging a public campaign for weeks to get the GOP-controlled Legislature to eliminate the whole tax on July 1. The Republican plan would phase out the tax over three years, dropping it to 4% in January, to 2% in 2024 and zero in 2025.
The House voted 114-3 Thursday to approve the Republican plan after the Senate voted 39-0 Wednesday to pass it, with Democrats in both chambers reluctant to oppose any version of the cut. The bill goes next to Kelly, who immediately promised to sign it, though she urged lawmakers to approve another measure to start the relief July 1.
The debate was dominated by election-year politics. Kelly portrays herself as a bipartisan problem-solver, and her proposed tax cut would start reducing people's groceries bills ahead of the November election. GOP lawmakers are countering her proposal by throwing rhetoric she used in her 2018 campaign against her.
Kelly and her fellow Democrats argue that consumers want to see as much relief as possible as quickly as possible. That was true Thursday at a Topeka grocery for Ryan Gay, a 51-year-old firefighter who's skeptical that the state will do something other than what “looks good on paper.”
“It's always about the now, right?" he said. “Just get rid of it now, and I save money in the long run."
Kelly argued that she was trying to help families struggling with the highest inflation in the U.S. since the 1980s. She promised in her first race for governor in 2018 to eliminate the tax but then put the idea on the back burner in favor of shoring up the state’s finances.
Republicans contended that they want a smooth rollout of a potentially complicated tax cut and to make sure that eliminating the tax doesn’t tank the budget.
Only 13 states charge any sales tax on groceries. Kansas' rate is second only to Mississippi's 7%.
The GOP plan would save taxpayers about $740 million over three years, and a family spending $200 a week on groceries would save $208 in 2023. The same family would save $676 in 2023 under Kelly's plan, and taxpayers would save as much as $1.4 billion over three years.
Kansas is flush with cash. It has had surpluses in its tax collections for all but three months in the nearly five years since lawmakers repealed most of an income tax-cutting experiment under GOP Gov. Sam Brownback. That experiment was followed by persistent budget shortfalls and became nationally notorious, even for Republicans.
Republicans argue that the state needs to delay starting the tax relief because the change will be complicated for grocers. The tax cut would apply to unprepared food, not most prepared foods. Adam Smith, House tax committee chair, said enacting the change July 1 is “not attainable.”
Caryn Tyson, the chair of the Senate tax committee, said during her chamber's debate: "Vendors would not have the ability to implement it in the actual time frame."
The state Department of Revenue and some vendors and vendor groups disputed the idea that the change would require months of work. Some consumers also are skeptical.
“They could pull the plug on it overnight,” said Steve Yager, a 75-year-old retiree who acknowledges that he doesn't support Kelly generally and, “I'm not a fan of any Democrat.”
Some Republicans are irritated with Kelly demanding an immediate end to the sales tax on groceries because they included a plan phasing it out in a 2019 tax bill that she vetoed. That bill included income tax cuts that she and other Democrats strongly opposed.
“So, don’t tell me about this being some political delay,” Senate President Ty Masterson, an Andover Republican, said of the GOP plan on the grocery sales tax.
Republicans also argue that lawmakers should be more cautious than Kelly wants because they don't know what the future holds, worrying that inflation will soon smother economic growth.
And they are now pointing to the budget woes following the tax experiment under Brownback as a warning. Kelly's criticism of Brownback's fiscal legacy was a key part her 2018 campaign.
“One of the things she says: It went too far, too fast,” said House Speaker Pro Tem Blaine Finch, a northeastern Kansas Republican.