POLITICS

'Axe the food tax': Gov. Laura Kelly says cutting grocery sales tax could save Kansas families $500 a year

Jason Alatidd
Topeka Capital-Journal
Wielding an axe, Gov. Laura Kelly announces her "axe the food tax" campaign at Dillons grocery store, 800 N.W. 25th St., on Monday afternoon. Kelly plans to introduce a bill for the coming legislative session that would eliminate the state's 6.5% sales tax on food.

With an ax in hand, Gov. Laura Kelly on Monday promoted axing the state's sales tax on food — reigniting a campaign promise that could save an average Kansas family $500 per year.

"This tax cut will help our families and help our main streets," Kelly said. "This tax cut will keep Kansans spending their money in Kansas, not going across our borders to buy groceries. This tax cut will put money back in your pocket. And this tax will create real savings for the Kansans who need it most."

Kelly's announcement at a North Topeka Dillons grocery store followed a Friday letter from Attorney General Derek Schmidt to top GOP lawmakers promoting cutting the tax.

While Schmidt cites inflation and other economic concerns for taking up the issue now, the Republican frontrunner for next year's gubernatorial election is effectively co-opting a major campaign promise of Kelly, a Democrat. 

"This issue has had bipartisan support since long before Laura Kelly was governor," Schmidt told The Capital-Journal in a Friday interview. "It's true that then-candidate Kelly campaigned on this in 2018, and it's also true that three years into her administration she has completely failed to deliver on that promise."

More:Food sales tax should be cut to help Kansans amid grocery inflation, AG Derek Schmidt tells GOP lawmakers

"This is not something new, not something we dreamed up last night," Kelly said when asked about Schmidt's letter at Monday's event, where she posed with the hatchet in front of one backdrop that said "axe the food tax" and another touting the savings for families. "This is something I've been wanting to do for a very, very long time.

"I asked the people of Kansas to be patient, and now I want to thank you for your patience. Because of that, we were able to put together the fiscally responsible budgets over the last three years and allow for the revenues to start coming in.

"Now we have the funds to do this and to sustain this tax cut."

Kansas can afford tax cut

The state continues to rake in more tax revenue than expected, in stark contrast to the days of missed revenues and budget cuts following former Republican Gov. Sam Brownback's income tax cuts. For the fiscal year, which started in July, Kansas tax receipts have exceeded expectations by nearly $440 million.

"Even after the full-blown pandemic," Kelly said, "we have the resources to eliminate the state food sales tax completely, while still fully funding our public schools, fixing our roads and bridges, expanding access to high speed internet and investing in the core services that make our state the best place in the nation to live, to work and to raise a family."

Eliminating the state's 6.5% sales tax on food would cost state coffers about $450 million a year, Kelly said. Meanwhile, families could save hundreds of dollars.

"A little extra in pockets after that weekly trip to the grocery store goes a long way, and the savings will add up," Kelly said. "When I sign this bill, a Kansas family of four will save, on average, over $500 on their grocery bill every year."

While Kelly said she was announcing a "bold new plan to save Kansas families money on their grocery bills," a detailed plan wasn't provided.

Aides said governor's office has started the bill drafting process, but a formal proposal is unlikely to be unveiled until December. The Legislature convenes in January.

Schmidt's letter also didn't include specific policy proposals. He told The Capital-Journal that while he thinks there shouldn't be a food tax, he was leaving it to legislators "to sort through what is fiscally possible."

Local sales taxes not affected

"We are one of only seven states in the nation that fully tax groceries," Kelly said. "At 6.5%, we are the second highest rate in the country. And if you add local sales tax on top of this, we are the highest in the country. That is completely and totally unacceptable."

If a bill gets signed into law next session, shoppers would likely see the lower grocery costs starting July 1. But that doesn't mean the tax will be zero percent.

Kelly isn't pushing local officials to do away with their taxes on food.

"I'm a big believer in local control," Kelly said. "I believe their local elected officials do what's right in their particular communities. They know what their needs are, so I'm going to leave it up to them."

The tax rate in Topeka is 9.15%, according to Kansas Department of Revenue data. In addition to the 6.5% state rate, Shawnee County adds 1.15% and the city adds 1.5%. Some local community improvement districts add special sales taxes raising the combined rates as high as 11.15%.

Shopping at the Dillons store where the governor made her announcement, Topeka mom Emily Hidy said she was excited by the news.

"I'm very frugal, I have three boys at home," said Hidy, who used to be excited at only a $75 grocery bill.

"Now, my low weeks are like $100 and big weeks are like $150. It's something my family can afford, but I can't imagine if ... we couldn't, especially going into the holidays. It would be stressful."

Hidy went to school in Iowa, where there isn't a state sales tax on groceries.

"It was just bizarre to me when I came back here to Kansas," she said. "I was like why don't we do that?"

Emily Hidy and her 2-year-old son Ethan examine produce at Dillons, 800 N.W. 25th St., on Monday afternoon. Hidy, who moved from Iowa and has three boys, says she thought it is strange that Kansas taxes its food unlike Iowa.

Playing politics on food taxes

House Minority Leader Tom Sawyer, D-Wichita, said the problem in past years has been that Republicans "play politics."

"They've got supermajorities for a long time and all they've ever done is increase the sales tax," Sawyer said, pointing to a 2015 sales tax increase — including groceries — passed by Republicans to help offset income tax cuts during the Brownback administration.

Senate President Ty Masterson, R-Andover, and House Speaker Ron Ryckman, R-Olathe, were receptive to Schmidt's letter Friday. Echoing Schmidt's blame on President Joe Biden and Democrats for inflated grocery prices, the GOP leadership also blamed Kelly for past failures to cut the tax.

Republicans have highlighted Kelly's veto of a 2019 tax relief package as the reason the food sales tax hasn't been cut. At the time, Kelly compared the broader package to the Brownback tax cuts.

Sawyer characterized that bill as "a very small food sales tax cut — 1 cent — but it included huge tax cuts for large multinational corporations that sent money overseas."

Rep. Tom Sawyer, D-Wichita, poses for a photo following Monday's announcement of the "axe the food tax" campaign.

More recently, House Republicans rejected a Democratic effort to add food sales tax relief to a 2021 tax package. The GOP supermajority eventually passed that bill over the governor's veto.

"In 2021, the Kansas Legislature passed a law that cuts taxes for major multinational companies," Kelly said. "2022 is the year of the family tax cut."

Kelly asked the Legislature for a bipartisan and "clean" bill without any other tax cuts tacked on.

"This really does need to come across my desk absolutely free — food sales tax elimination only," Kelly said. "We don't need to muddy the waters. We don't need to add other issues into this."

Sawyer said he is "very happy" that Schmidt is encouraging Republican legislators to take up the issue because it may mean a bill gets enough support.

"Personally, I think it's immoral to tax food," he said. "That's something we shouldn't tax."

Jason Tidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jtidd@gannett.com. Evert Nelson of the Topeka Capital-Journal contributed reporting.