This session, OK Policy has been involved with a coalition of organizations and individuals promoting an increase in the Sales Tax Relief credit, commonly known as the grocery tax credit. The existing credit, intended to offset the state sales tax on groceries and other essential household goods for low- and moderate-income households, provides for $40 per household member for households that meet income qualifications (up to $50,000, if the household includes a senior, dependent, or person with disabilities, or $20,000 for other households). The amount of the credit has been left unchanged since the early 1990’s, while eligibility was last raised a decade ago. During this time of deepening economic hardship, our belief has been that bolstering the sales tax credit should receive the highest priority if tax cuts remain under legislative consideration. We have proposed increasing the credit from $40 to $60, along with a limited expansion of eligibility.
Although we are just now reaching the mid-point of the legislative session, the grocery tax credit proposal has already taken several spins on the legislative roller coaster. The proposal was initially introduced in two bills, HB 2204 and SB 567, authored by Rep. John Trebilcock and Sen. Andrew Rice, respectively. SB 567 was denied a hearing in committee, but HB 2204 passed out of a House subcommittee in February. By the time the bill reached the full House Appropriations and Budget committee, however, it had been amended to include language phasing out the state sales tax on groceries. HB 2204 has now died in the Senate; however, the sales tax credit language popped back up this week in a different bill, SB 318, which would also repeal the sales tax on groceries over five years. That bill passed through a House subcommittee on Monday and should be headed to conference committee, along with all the other tax-cut measures that have survived the initial rounds of legislative winnowing.
We are aware that given the state’s serious and worsening budget situation, all tax cuts may get left off the table when the time comes for serious budget negotiations later this session. However, we are encouraged that the sales tax credit proposal has stayed alive this far and continue to imagine that when the time comes to adopt a fiscally modest tax cut that targets its benefits to those who are most financially-strapped, an increase in the sales tax relief credit may finally happen.