Missourians keep $144 million under bill eliminating grocery sales tax

(The Center Square) – Missouri taxpayers will pay less to feed their families under a new bill eliminating the state tax on groceries.

House Bill 1992, sponsored by Rep. Mary Elizabeth Coleman, R-Arnold, would eliminate a 1.225% sales tax on most food sales if enacted. The fiscal note for the bill states Missourians spent $14.4 billion on taxable food sales in 2021 and estimated taxpayers would keep approximately $144 million annually during trips to the grocery store.

The bill is opposed by the Missouri Association of School Administrators. The Missouri’s school district trust fund currently receives 1% of the tax and the Department of Corrections gets .225%.

Coleman distributed an amendment at the start of Wednesday’s hearing to correct two problems: the legislation would tax food purchased by those in the federal Supplemental Nutrition Assistance Program (SNAP) and it eliminates local municipalities from collecting sales taxes at grocery stores.

“We would actually be adding the tax by getting rid of the tax completely,” Coleman said regarding the SNAP situation. “We want to make abundantly clear that we’re not trying to tax the poor. I’m working with the MML (Missouri Municipal League) as there’s no intention by me to eliminate the taxes that voters approved in their districts.”

Richard Sheets, executive director of MML, acknowledged Coleman is working on solving the problem with the bill, but said the concept is a concern. The fiscal note estimated $93 million in local taxes are collected annually at grocery stores.

“We think there are a lot of consequences,” Sheets said. “Your local sales taxes pay for a lot of important services and reducing that revenue stream would mean cutting important services for everyone or raising other taxes, like property taxes.”

Coleman said the average Missourian will lose two paychecks per year in purchasing power due to the inflation rate, which is approaching 7%. She said the average Missourian makes approximately $29,000 annually and spends $3,136 on groceries.

“This is a significant portion of their budget,” Coleman said.

Coleman said she’s seeking to eliminate the portion of the tax going to the Department of Corrections and other funding mechanisms are possible for the school district trust fund.

“I think the sales tax in general is the most regressive tax we can have,” Coleman said. “Taxing the poor is a horrific way to operate state government. Any time we can eliminate a tax, I’m in favor of that. And eliminating a tax that hurts the poorest of the poor, I’m especially in favor of.”

Scott Kimble, director of advocacy for the Missouri Association of School Administrators, testified against the bill and said it would take $144 million away from school districts.

“For four consecutive years, we haven’t added any new money to the state’s foundation formula,” Kimble said. “Our schools are approximately $200 million underfunded in school transportation.”

Kimble reminded the committee of Republican Gov. Mike Parson’s intention to increase the starting teacher salary from $25,000 to $38,000 in his 2023 budget. He said schools also are losing purchasing power due to inflation and federal COVID-19 funds must be spent by 2024.

“This (bill) will benefit people of lower means, but the money generated for public schools is used to provide wrap-around services for some of our poorest kids,” Kimble said.

Nonprofit agencies testified in favor of the bill. Mallory Rusch, executive director of Empower Missouri, said education funding shouldn’t be a wedge to dissuade supporters of the bill and schools.

“We shouldn’t create a false dichotomy here,” Rusch said. “It’s important to remember this shouldn’t be a one-or-the-other type of situation. We can be bold and think about great ways to make sure that education is being funded in our state while not ensuring that burden falls on the poorest citizens of Missouri.”

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