KANSAS CITY, Mo. – On Tuesday, the Kansas House tax committee approved legislation that would reduce the overall statewide tax on general purchases to 6.3% and cut the state sales tax on groceries in half to 3.5%, a measure that would lower annual revenue by $336 million.
Kansas and Missouri are two of seven states that still tax groceries, according to the Center for Budget and Policy Priorities. Kansas’ food sales tax rate is 6.5%, the second-highest rate in the country.
Kansas Gov. Laura Kelly announced her plan to ‘Axe the Food Tax’ in November, with support from the Kansas Health Foundation, Kansas Action for Children, Kansas’ Food Bank, among others.
But as lawmakers work to reduce grocery sales tax, or eliminate it entirely, in both states, those opposed are concerned about a loss of revenue.
What revenue is at risk?
In Missouri, groceries are taxed at a statewide reduced sales tax rate of 1.225%, roughly five times less than what’s being taxed across state lines in Kansas.
But Rep. Mary Elizabeth Coleman, R-Arnold, proposed a bill on Monday that would remove a 1% sales tax on cold and unprepared foods.
The tax currently goes to the School District Trust Fund, which would be down nearly $144 million in 2024 if the measure passes. Last school year, payments from the fund made up about $980 million, according to state data.
Scott Kimble, director of legislative advocacy for the Missouri Council of School Administrators, said losing the money may limit services to students, something districts are working to provide more than ever before.
Rep. Shane Roden, R-Cedar Hill, said he’s concerned that unhealthy foods would also meet the tax cut.
After bantering back and forth about the pros and cons of reducing the tax, the amendment was ultimately dropped because it would lead to a tax increase of over $300 million due to changing definitions for what qualifies as “food.”
On the Kansas side, the move to reduce sales tax on groceries would lead to an estimated $605 million in fiscal 2026 lost from the Kansas Department of Revenue, something state legislators are open to considering.
Rep. Adam Smith, a Weskan Republican and chairman of the House tax panel, said diminishing the sales taxes in Kansas was wise, given Gov. Sam Brownback’s move to severely reduce income tax rates in 2012.
This led to revenue shortfalls, the 2015 spike in statewide sales tax and the repeal of Brownback’s income tax exploration in 2017.
“Axing the food tax will directly help hard-working Kansans save money and get much-needed relief from the pandemic-induced inflation,” Kelly said in a statement. “I urge the Legislature to work together to send me a clean bill eliminating the state’s sales tax on food as quickly as possible.”
Why cut the grocery tax?
Although some argue the cost to reduce sales tax on groceries is too burdensome, others say the benefit outweighs the cost.
According to Kansas Food Banks, “While 10.9% of Americans are food insecure, 12.1% of Kansans (more than 350,000) are food insecure.”
“The food insecurity rate among Kansas children is 17.1%, much higher than the national average of 14.6%. A food sales tax that adds as much as 10% to every Kansan’s grocery bill has a significant impact on the food security of Kansans.”
In Kansas, the average family of four, on average, spends about $9,058 on groceries per year, according to 24/7 Wall St, nearly 4.3% more than what the average family of four in Missouri spends, about $8,666 per year, according to UpNest.
In Missouri, cutting the food sales tax would save an average family $89.66 each year.
“Ending the Food Sales Tax will save the average Kansas family of 4 over $500 a year,” Lynn Rogers, Kansas State Treasurer, said in a statement. “That’s more money for groceries, saving for education, affording housing costs, and investing in retirement accounts.”
Kansas Action for Children also supports Kelly’s proposal to “Axe the Food Tax,” claiming it would benefit low- and moderate-income families who struggle to put nutritious food on their tables.
“Sales taxes worsen income inequality as low-income people must pay a higher share of their income on basic needs like groceries,” Kansas Action for Children stated.
The group recognizes how costly the plan is to the state, but urges lawmakers to consider the low and middle classes more than the upper.
“The elimination of the state-level food sales tax, on its own, does not appear to put Kansas in a dangerous fiscal position in the coming years,” Kansas Action for Children said in a statement. “However, if the elimination of the food sales tax is tainted by the inclusion of expensive and unnecessary tax breaks for corporations and the wealthiest Kansans, Kansas will move into a precarious fiscal situation.”
The House, Senate and Kansas governor are expected to grapple through how to moderate state sales tax during the current legislative session. Kelly, along with all 125 members of the House, are up for re-election in November.
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