Grocery tax cut goes into effect Aug. 29; most believe it will help families
Aug. 27—TAHLEQUAH — In February, the Legislature voted to eliminate the state's portion of the grocery tax, which at the time was estimated to cost the state $418 million in lost revenue.
That tax relief goes into effect Thursday, Aug. 29.
Of the 9.5% tax on groceries, 4.5% goes to the state, and the rest to Cherokee County and the city of Tahlequah.
"The last numbers I received was a yearly impact of around $300 million [on state revenue] when fully implemented," said State Sen. Dewayne Pemberton, R-District 9. "The savings is 4.5 cents on the dollar, so the savings will depend on households' monthly grocery budgets."
This elimination will not cover prepared foods, such as ready-to-eat meals, deli sandwiches, hot food and dietary supplements. Over-the-counter medications, beer, self-serve fountain drinks and sushi will also still be taxed the full 9.5%.
After the tax break goes into effect, Cherokee County will still receive 1.75% of grocery taxes collected, and the city of Tahlequah will collect 3.25%, leaving a 5% tax to be paid by consumers. On a $25 item, the tax without the elimination is $2.38 versus the cost of $1.25 with the tax break — a savings of $1.13.
On a total bill of $200, without excluded items, the tax cost at the new rate to consumers is $10 versus $19, a savings of $9. If that amount is purchased every week, over the course of 52 weeks, this potentially saves a family $468.
At the time the tax relief was passed, Pemberton was leery of the impact to funding for teachers and state and federal employees. The tax was scheduled to go into effect 90 days after the adjournment of the legislative session May 25.
When the tax elimination was voted on in February, Angie Taylor, co-owner of Save A Lot on East Downing Street, said she believed it would help her customers.
"Every single person has to eat. It doesn't hurt or help [Save A Lot] either way," Taylor said. "But people are struggling with the cost of goods going up."
State Rep. Bob Ed Culver, R-District 4, said the budget impact is $306 million since the tax cut doesn't take effect until Aug. 29.
"Annualized, it is estimated to cost $366 million a year," Culver said. "The average household is expected to save $260 per year."
Nathan Reed, CEO and president of the Tahlequah Area Chamber of Commerce, said the elimination of the state's portion of the grocery tax will reduce the cost of groceries to working families
"Any reduction in the cost of basic necessities such as food is always a relief for families," Reed said "With food insecurity at a high in this area and across the state, every little bit can help people afford that next basket of groceries and feed their family. We hope this cost savings may help bring the food insecurity issue down by making grocery bills a little easier to afford in the future."
Vice President Kamala Harris proposed a ban on price gouging specifically against food suppliers and grocery stores as part of her economic plan to curb the rising cost of living. An on CBS News, titled, "Kamala Harris wants to ban price gouging to tackle inflation; here's how economists rate her plan," published Aug. 21, outlined her ideas.
"Harris highlighted the surging cost of groceries, which have jumped 25% since January 2020, while noting that some food companies are at the same time enjoying record profits," states the . "Certain types of foods have seen even sharper spikes, with Harris pointing out a loaf of bread is now about 50% more expensive than prior to the COVID-19 pandemic."
Harris' comprehensive plan emphasizes industry competition, not just a ban on gouging, and could help bring down prices, states the , quoting a spokesperson for Harris' campaign for president.
The U.S. Public Interest Research Group's guide identifies the practice of price gouging.
"Whether it's a hurricane or other storm, a shortage of infant formula or a pandemic, consumers often find unfair price gouging on products they need such as bottled water, chain saws or food their children need," states the guide.
Lifting the state tax is not a problem for stores selling groceries, as it is a simple adjustment to the programing of cash registers. Diana Tinajero of Tinajero's Meat Market and Taylor both agree it is no burden on management to take out the 4.5% state tax from the registers programming.
"The break with the grocery tax would definitely help our customers," Tinajero said in February when the tax bill passed.
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