Cutting the Food Tax Not Really a Good Idea

REDUCING the food tax or any tax is certainly an appealing and popular idea. But I believe the Gazette’s Aug. 9 editorial, "Down with food tax," is off the mark.

This past year did not really produce a state "surplus."

Yes, we had more revenue than expenditures, but we also have a crisis in underfunded pensions, Medicaid and health-care liabilities, to name just a few financial problems. Surely, newspapers can recognize the need for paying our debts and funding needed social programs – first.

The vast majority of our citizens can afford to pay the food tax. Also, as you very well know, the poor have food stamps and other programs and, thus, don’t pay the sales tax on food anyway. Moreover, this may be the only general revenue tax that many pay, because they otherwise have tax-exempt income.

Of course, there are many other "necessities of life" that could justifiably be exempted from sales tax. For example, should we next look at removing the sales tax on clothing?

This talk of tax reduction has now taken a political life of its own. So, if there must be a tax reduction, the first step should be to increase the state income tax exemption. It is currently $2,000 per dependent, and has been so since 1987, whereas the federal personal exemption is $3,200 each.

This can put real money in the pockets of those who pay taxes and has potential to spur the economy.

An alternative to reducing the food tax gradually is to reduce the personal income tax rates and/or to provide food tax refunds through the personal income tax system. This assures that those who are paying taxes see the benefit of the reductions.

Another tax that should be looked at – if we are going to reduce taxes – is the gasoline tax. We are all very aware of the extremely high cost of gasoline, but most people don’t know that the state gasoline tax rose two cents a gallon in January, because it’s partly linked to gas prices.

We all pay this tax – both at the pump and in all the products (including food) and services that we buy, because the cost is passed on to the public and business consumers.

I hope you will recognize that reducing taxes is the wrong use of our nonexistent "surplus."

We should tackle our financial burden first – but, if not, let’s look at the personal income tax system or the gasoline tax.

P.S.: Retailers can speak for themselves, but I believe a gradual reduction in the food tax will be costly in repeated reprogramming of cash registers, determining what is and what is not food, and will play havoc with retailers that sell food.

Grigoraci is a certified public accountant and Charleston’s city treasurer.