Kansas food tax takes a toll on rural grocery stores, their employees and local economies



A report from our policy team shows that Kansas’ current 6.5% sales tax on food hurts economic activity and people’s health, especially in rural areas.

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The study, conducted by the Kansas Public Finance Center at Wichita State University Hugo Wall School of Public Affairs, found that the current sales tax on food costs the average rural Kansas grocer close to $18,000 per year and forces customers to purchase lower-quality, less expensive items.

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When the Kansas Legislature raised the states sales tax from 6.15% on July 1, Kansas’ sales tax on food became the highest in the nation. County and city governments can levy additional taxes, bringing the total as high as 10.5% in some areas.

KC Healthy Kids supports legislation that would eliminate sales tax on food.

“We began in 2014 working with bi-partisan policymakers and other statewide organizations to eliminate the food tax,” says Ashley Jones-Wisner, state policy manager for KC Healthy Kids. “We look forward to getting back to work after the legislative break and expect to make big strides during the upcoming 2016 legislative session,” she said.

The new study found that a sales tax on food reduces grocery sales by nearly 3%. Since rural counties typically aren’t able to offer a variety of retail establishments, their consumers are more likely to leave the area to buy their goods in counties or states with more retail options and lower taxes/prices.

Hiawatha grocer Tim White permanently closed his store this summer around the same time lawmakers raised the sales tax. The economic adversity ripples from the grocers to their employees and beyond, either in reduced hours and wages or worse, employees being terminated.

“It is really sad news,” said Dr. David Procter, director of Kansas State University’s Rural Grocery Initiative. “Grocery stores are a critical piece of infrastructure sustaining rural communities. They provide numerous local jobs and generate important tax revenue. Having a grocery store attracts new residents to a town and helps retain current citizens,” Procter said.

He went on to explain that the loss of these businesses correlates with declines in other local businesses and in population in rural communities.

“Ultimately, rural grocery stores make their communities more attractive places to live. Similar to schools, post offices, restaurants and churches, grocery stores are social gathering spaces where bonds of community are built and strengthened,” said Procter

Sales tax on food also impacts health and nutrition. Shoppers must spend a higher percentage of their income on food necessities and often are forced to purchase lower-quality and less expensive items.

The study also showed that dairy and fruit are the first things shoppers leave on the shelves when they are trying to make ends meet. But these foods are powerhouses on our plates. They provide a variety of nutrients that prevent illness and help maintain a healthy weight. Depending on a person’s age, the USDA recommends 2-3 cups of dairy products and 1-2 cups of fruits and vegetables per day.

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