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Kansas’ food sales tax could get cut further. Here’s how it could impact your grocery costs

Lawmakers approved a plan to further reduce Kansas' sales tax on groceries, though its path forward is uncertain as Senate President Ty Masterson, R-Andover, and the Kansas Senate wrangle on a tax plan.

Lawmakers approved a plan to further reduce Kansas’ sales tax on groceries, though its path forward is uncertain as Senate President Ty Masterson, R-Andover, and the Kansas Senate wrangle on a tax plan.

After some wrangling over the best way to address Kansas’ sales tax on food, lawmakers eventually signed off on a measure to reduce the state and local taxes on groceries — though its path forward remains uncertain.

At the beginning of Thursday, the Kansas Senate appeared poised to approve a measure to reduce the sales tax on food — but only for certain foods deemed to be healthy under the federal Women Infant and Children program definition.

The proposal, Senate Bill 248 brought by Senate President Ty Masterson, R-Andover, was intended to incentivize residents to choose healthier foods and free up funds for a sweeping income tax reduction that many Republicans have favored. It would have raised taxes on all other foods.

But by the end of the evening, lawmakers instead settled on a proposal to eliminate all state and local taxes on all groceries, to be implemented on Jan. 1, a move that is expected to cost $115 million. The measure passed on a 22-16 vote, with a smattering of Democrats and Republican opposition.

The food tax increase was intended to free up money for a flat income tax

The move would mirror more closely what was favored by Gov. Laura Kelly last year — the speedy elimination of the state’s 6.5% tax on food. The idea was a top plank for her re-election campaign, with the governor even appearing in public with a hatchet to encourage legislators to “axe” the tax.

Lawmakers partially obliged, opting to phase-in a reduction of the tax, with the levy dropping to 4% in January, with Republicans arguing that a more restrained approach would ease the burden on the state’s coffers. Local taxes on groceries, which vary across the state, remained intact.

Kelly was undeterred, launching a renewed bid to speed up the elimination of the tax.

“It didn’t go far enough, fast enough,” Kelly said at a Roeland Park Price Chopper last year unveiling her plan. “And Kansans still need more relief. The cost of groceries is way too high, plain and simple.”

But Masterson initially favored his own plan, which he said would free up funds for a separate plan, also approved Thursday, to exempt retirement income from taxation.

He also said it could spur on the ability to pursue a so-called flat tax, with legislators passing a bill to reduce the personal income tax to 4.75% at a cost of over $1 billion over three years.

“The structure is actually the most important thing to get to,” Masterson told the Senate Committee on Assessment and Taxation Monday. “And this would allow you to get to a structure at a lower rate. So this is meant to be a tool.”

The idea was not without detractors, who say the government should not shape an individual’s food choices. Grocers also opposed the bill.

Jon McCormick, president and CEO of the Retail Grocers Association of Kansas and Missouri, said the idea could effectively lead to two taxes appearing on shoppers’ receipts.

“We’re just going to add some more confusion,” he said.

Speaking with reporters after the vote Thursday night, Masterson said he remained in support of the healthy food cut but bowed to an appetite in the Senate for something more aggressive.

He was hoping Kelly would play ball on a deal on taxes.

“She said she’s in the middle,” he said. “Now I’m waiting for her to meet me.”

Kansas food sales taxes would be cut at local level

Lawmakers eventually opted to dump Masterson’s plan, a move even the senator himself ultimately supported.

The amendment, brought by Sen. Mike Peterson, R-Wichita, would speed up the elimination of both state and local sales taxes. The move would have an uncertain impact on local governments, who may need to raise property taxes in order to compensate.

Officials didn’t have an estimate of how much sales tax revenue local governments would lose.

“I don’t like Republicans going down and overriding the locals,” Sen. Ron Ryckman, R-Meade, said during a Senate GOP caucus meeting. “I just think that’s wrong policy. And it’s not a Republican ideal.”

But Peterson said the move would strengthen the position of the Senate, as they would almost certainly need to hash out any policy differences on taxes with their counterparts in the Kansas House.

“Our constituents think it is going to zero,” he said. “They’re wondering why they have all these varying things. One city may have a 2% tax and then one may have a 5% tax. This eliminates that.”

Indeed, the eventual path forward on taxes is unlikely to be decided anything soon. In 2022, lawmakers passed their chosen tax relief policies at the end of session after extensive negotiations between lawmakers.

The debate is likely to be similarly lengthy this year, as lawmakers are deciding on the best route to leverage a surplus of over $2 billion, justification in the minds of many for further tax cuts.

Rep. Adam Smith, R-Weskan, chair of the House Tax Committee, noted that he personally is in favor of booting the grocery tax. His home sits one mile from the Colorado border and he notes that many residents in northwest Kansas pass on shopping at local establishments and go to Colorado or Nebraska instead.

Smith has said he plans to introduce a scaled-back income tax reduction, a move he said would allow lawmakers to be more aggressive in ending the food sales tax.

“If we want to do that, I think we can afford that,” Smith told reporters Thursday.

This article originally appeared on Topeka Capital-Journal: Kansas grocery sales tax could get cut even further in 2023 under bill