There are lots of ways to satisfy the state's appetite for more revenue, but hiking the tax people pay at the supermarket should not be one of them.
When the state moved a decade ago to sharply lower the sales tax on unprepared food, the principal argument for doing so revolved around the disproportionate burden a grocery tax places on low-income families. That argument is as valid today as it was then. As the current Legislature contemplates various changes to tax policy, any increase in the food tax should be considered among the least appetizing options.
Efforts to reduce or eliminate the tax on groceries actually began in earnest at least two decades before former Gov. Jon Huntsman Jr. pushed for a series of step-downs in the rate — eventually approved in 2006 as part of a larger tax reform initiative. Today, lawmakers are considering a measure that would restore the tax on food, taking it from the current level of 1.75 percent to the full 4.75 percent base sales tax rate. Supporters argue a loss of revenue from lower taxes on food has hurt funding for programs aimed to help low-income citizens. Exactly what programs have been hurt and by how much is a bit vague, but regardless, the notion that the poor should be taxed to pay for programs to help the poor is foggy logic and not sound policy.
Restoration of the food tax has been a subject of consideration in nearly every legislative session since the tax was originally reduced. Some lawmakers have seen it as low-hanging fruit in efforts to cull more revenues. In 2009, in the wake of the Great Recession, the state faced serious revenue shortfalls and an increase in the food tax — which was eventually avoided — was seen as one way to make up for lost income. Today, the state enjoys a surplus and a revenue stream above projected levels. In addition, the Legislature has taken on the important duty of working to reduce homelessness in Utah, a campaign that would not be furthered by forcing people struggling to maintain a household to have to pay more at the grocery store.
The food tax is touted as a more stable stream of revenue for the government than, say, the luxury tax. Proponents point out that unlike luxury items, people always buy food, even during economic downturns. Lawmakers, however, should be reluctant to siphon money from middle-income families via food during periods of economic depression.
Indeed, the food tax is among the most regressive of taxes and its impact on low-income households has only grown in recent years. As median wages for low- and middle-income households have barely kept up with inflation, the cost of basic food has taken a larger share of resources. The Legislature may wish to broaden the tax base and bring more consistency and fairness to overall policy, and such motivations are well placed. Lawmakers are also under pressure to invest more in public education.