Proposals to eliminate Missouri sales tax on groceries in limbo

Sen. Mary Elizabeth Coleman enters the Missouri Senate on the first day of the 2023 legislative session. (Annelise Hanshaw/Missouri Independent)

Rep. Mary Elizabeth Coleman, R-Arnold, speaks during a hearing Oct. 5, 2021. | File photo by Tim Bommel/Missouri House Communications

Missouri is one of just 13 states that levies a sales tax on grocery food items.

Citing the hefty burden on low-income shoppers and rising cost of food, several other states have moved to reduce the burden of the grocery sales tax. Kansas began phasing it out this year and Illinois suspended the tax for one year. 

But in Missouri, renewed bipartisan efforts to eliminate the sales tax on take-home grocery food this session appear stalled. 

A stand-alone bill to eliminate the state portion of the grocery sales tax, sponsored by Sen. Mary Elizabeth Coleman, R-Arnold, was approved by committee last month but has yet to be placed on the Senate’s debate calendar.

“I’m not as confident that that will have a path forward,” Coleman said in an interview Wednesday with The Independent, adding that typically, bills that haven’t reached the other chamber at this point in session “have a harder time” ultimately passing — although she is “not pessimistic” because it is a bipartisan issue other states have tackled.

Six bills in the House have been filed to eliminate the grocery sales tax but none have been assigned to committee.

Proponents successfully added the grocery tax proposal as an amendment to an unrelated bill two weeks ago in the Senate. But last week, after the estimated cost of eliminating the tax was determined, the bill’s sponsor demanded it be removed, effectively derailing both measures.

Coleman said that she did not support the removal of the grocery tax provision last week.

“I was really disappointed to see that we were stripping that off,” she said.

The fiscal note for the grocery tax loss estimates that the state would lose over $1.3 billion in local funds and $200 million in state funds each year beginning in fiscal year 2025. Coleman’s stand-alone bill included only the state tax repeal.

Sen. Lincoln Hough, R-Springfield, raised concern about the price tag, arguing during the Senate debate that the legislature’s income tax cuts negotiated last year would provide similar help to low-income families.

“This is going to be an interesting litmus test as to whether or not the majority of the (Senate) still continues to believe that we need to be lessening the tax burden more holistically, or if we’re starting to say maybe enough is enough,” Hough said, adding that “a number of reductions to the individual income tax…will continue to decrease the burden on individuals.”

Coleman, who proposed similar legislation in the House last year, said taxing essential items like food poses an inordinate cost to the lowest-income consumers.

“I don’t think that the taxpayer is wanting us to tax food,” she said. “I really don’t believe that.”

The lowest-income U.S. households spent over 30% of their incomes on food in 2021, according to federal data released last month, while middle-income families spent just 12%.

The price of at-home food nationally soared by around 11% in 2022 compared to 2021. 

Take-home grocery food items in Missouri are taxed by the state at a rate of 1.225%, which goes mainly to a fund for public schools. Localities levy additional grocery sales taxes at varying rates which can add up to 8%

“I would argue that food is a necessity,” Coleman said in February during a Senate committee hearing. “And I find taxes that are essential items are some of the most regressive, harming the poor, and not the way to fund our state government.”

Coleman’s bill would eliminate the 1% state sales tax, but not the local taxes. She said during Senate debate last week that local governments “were pretty concerned about the impact this might have on their budgets.” 

Eliminating the state sales tax, she said, would save a family of four around $87 per year on groceries. 

But it isn’t clear what funding sources would backfill the lost revenue to education — a challenge several states face as they attempt to eliminate the tax, according to a Pew Trusts report earlier this year.

“My question is your bill doesn’t address the shortfall. So we’re dependent upon other bills,” said Sen. Doug Beck, D-Affton.

“I would prefer that that would be in one bill, that we could see that both things pass at one time,” Beck added.

Mallory Rusch, executive director of the anti-poverty organization Empower Missouri, who testified in favor of the bill in February, said “we’ve been put in a little bit of a bind” by Missouri because the tax is tied to education. 

“We believe that it is really important to fully fund education,” Rusch said, “but we don’t feel like that education funding should come on the backs of those who have the least across the state of Missouri.”

Education entities raised resistance last year to a similar House bill because of concern around funding.

The fiscal note estimated the school district trust fund would lose over $115 million next fiscal year if the state sales tax were removed. 

Rusch also said that local sales taxes can be “far more burdensome” than state ones.

Coleman said they could replace the funds with surplus revenue, or through other legislation, such as by passing a proposal to legalize video lottery games, which needs to be used for education — though that proposal is not guaranteed to pass.

Senate Minority Leader John Rizzo, D-Independence, during debate last week pointed to the state’s large budget surplus. 

“I’m not opposed to tax cuts,” Rizzo said. “If we are going to do that, I’d rather it affect a single mom, I’d rather affect a family that’s trying to make ends meet.”

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