Food Sales Tax Set to Drop Again, Decrease to 3 Percent is Last Planned for State

By GEORGE HOHMANN

DAILY MAIL BUSINESS EDITOR

The state sales tax on food is going down – again.

The tax dropped from 6 percent to 5 percent on Jan. 1, 2006, declined to 4 percent last July and decreases to 3 percent on July 1.

Each percent equates to about $25 million a year, so the 3 percent cumulative decrease lets consumers keep about $75 million in their pockets and purses, said Craig Griffith, deputy state tax commissioner.

Gov. Joe Manchin championed the decreases in the tax, which were passed by the Legislature in 2005, although some clamored for a quicker – and total – elimination of the tax. Chief among Manchin’s critics on the issue was coal baron Don Blankenship, who reportedly spent an estimated $500,000 of his own money in a failed attempt to convince lawmakers to repeal the tax altogether.

Manchin’s slower approach held sway. The 1 percent decrease that will take effect July 1 is the last scheduled decrease. However, the tax could go down more. Manchin has said he favors elimination of the tax if the state can afford the loss of revenue and if the decrease is done in a gradual, responsible manner.

Manchin spokeswoman Lara Ramsburg said Wednesday, “The governor does support the responsible reduction of the food tax, but at this point there are no plans in place beyond this new cut until we can do it responsibly, because it has to be sustainable and each percentage point is at least $25 million in our base budget.”

When the sales tax on food was debated in 2005, it was said that the tax drove shoppers in border counties across state lines where the tax was either lower or nonexistent.

Griffith said the state does not have any evidence to show the effects, if any, the reductions have had on grocery stores in the state’s border counties.

Even with the upcoming decrease, West Virginia’s tax will still be higher than all surrounding states. But State Deputy Revenue Secretary Mark Muchow pointed out that the general sales tax rate is often higher in states exempting food from sales tax, since many of those states allow counties to impose a local sales tax.

For example, the general sales tax rate in nearly all bordering counties in Ohio is 7 percent, Muchow said. Also, the sales tax rate in Allegheny County, Pa. – the county that includes Pittsburgh – is 7 percent. Muchow pointed out that the typical grocery cart at checkout contains a significant portion of non-grocery items taxed at these higher rates.

When the sales tax on food declined in 2006, some grocers reportedly had issues re-programming their cash registers. “But over the last couple of years we haven’t heard anything from grocers or food retailers because they’re set up for this now and they’re prepared for it,” Griffith said.

Technically the tax will go down at 12:01 a.m. on July 1. “That may be an issue for a few grocers that stay open all night but it shouldn’t be a major issue for most,” Griffith said.

The legislation that reduced the sales tax on food makes a distinction between groceries and prepared food, which is still taxed at the 6 percent rate. Prepared food is generally defined as food sold in a heated state or sold with utensils, Griffith said. More about this can be found in state tax document TSD 420, which can be accessed online. To do so, visit www.state.wv.us/taxdiv and then click on “Publications.”

Restaurants have taxed food at the 6 percent general sales tax rate and will continue to do so.

Contact writer George Hohmann at business@dailymail.com or 348- 4836.

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