A lawsuit challenging whether Gov. Butch Otter met the constitutional deadline with his veto of the grocery-tax repeal legislation may not go far. But getting rid of the sales tax on food is not a lost cause.
It will be a different ballgame in a couple of years.
“In just about 655 days (it’s a bit less than that now), Idaho will have a new governor, and I predict that governor will be an actual conservative who will not hesitate to sign a bill to end the taxation of food,” said Wayne Hoffman, head of the conservative-based Idaho Freedom Foundation.
Don’t go rushing to Wayne for his Kentucky Derby pick, because his prediction isn’t that bold. All three of the announced candidates for governor – Lt. Gov. Brad Little, former Sen. Russ Fulcher and Boise developer Tommy Ahlquist have said they favored repeal of the grocery tax. It’s a good guess that Congressman Raul Labrador, a potential fourth candidate, also would favor repeal.
Little, for one of the few times publicly, is at odds with the governor on this issue. In more cynical terms, according to Hoffman, “It speaks to how little influence he has with the governor. If he was fighting for grocery-tax repeal, he certainly didn’t do a good job of it.”
Politically, Little’s position makes sense in the face of a governor’s race where candidates are trying to “out-conservative” one another.
“Idaho’s economy faces many challenges, including a difficult tax climate when compared with our neighboring states,” Little said. Montana, Wyoming, Oregon, Washington and Nevada do not tax groceries and Utah taxes groceries at a lower rate than its general sales tax. This repeal would quickly make Idaho’s tax code more competitive.”
Fulcher’s opposition to the grocery tax is no mystery, since he and now-Sen. Cliff Bayer were on the ground floor of the debate a decade ago. Fulcher and Bayer failed in efforts to repeal the tax, but succeeded in pushing through a more modest grocery tax credit. Fulcher’s stand is similar to Little’s.
“By vetoing the repeal of this tax, our governor has not only denied Idahoans tax relief, but he’s forfeited commerce to neighboring states. Citizens in Idaho’s border towns will continue to leave the state and spend their money in places they don’t get taxed.”
Ahlquist sees the grocery-tax repeal as part of a list of tax-cutting initiatives he’d promote as governor.
Otter’s position is not surprising, since he has said for some time that he opposes repeal of the food tax. But it’s a bit odd coming from a governor who touts himself as a champion for tax cuts.
“I have approved about $1 billion in tax relief since I took office in 2007,” Otter said in his veto message. “However, the costs of this particular proposal are too high and the potential for imminent financial need too great for the small amount of tax relief it would provide.”
Otter said Idaho should learn from Utah, where leaders advise, “Don’t do it. The ramifications of lifting the sales tax from food have made budgeting much more difficult with the loss of what indisputably has been their most stable and consistent source of revenue for essential government operations.”
Hoffman is not impressed by Otter’s claims. Comparing structures of two states is “like apples and oranges. He’s making it sound like Utah passed it (full grocery-tax repeal) and now regrets it. That’s not true at all.”
Hoffman also disputes Otter’s commitment to tax cuts. A large portion of that $1 billion was through raising the grocery tax credit to correspond with Idaho’s 6 percent sales tax. Other measures of tax relief were more than offset by increases in the fuel tax and registration fees.
“We’re looking at the last 10 years of Otterdom without tax relief,” Hoffman said. “For whatever the reason, the governor is more concerned about protecting the state government than those who pay the bills.”
In Hoffman’s world, the only “good” tax is “no” tax. But he describes the food tax as one of the state’s worst. A vast majority of Republican legislators agree with him on this one.
But in a couple of years, barring an unexpected economic crash, things will be different. All legislators need to do is pass the same bill and the governor will sign it. Or they could pass a bill early next session and override the governor’s veto.