Repeal of the sales tax looks unlikely

Another legislative session is about to wrap up shortly with a smack of the gavel at the statehouse and it appears the much maligned sales tax will live on.

 Every session Idaho lawmakers tell constituents that this is the year it gets repealed. “You betcha! We’ll get right after it,” is the oft-repeated mandate, or so I paraphrase.

 Everybody is for repealing it from the governor on down to lawmakers of both parties.

 It just about happened two years ago. Lawmakers approved scrapping the sales tax but the bill was vetoed by then-Gov. Butch Otter.

 It’s the right thing to do, if and when it happens. Taxing food is a regressive tax, especially on low income residents. The neighboring states of Oregon, Nevada and Montana have done away with taxing groceries.

 As easy and popular as it sounds to repeal the 6 percent sales tax, passing the legislation to actually do it is a fiscal tussle with a few complications.

 Lawmakers were initially optimistic that the sales tax would be repealed this session. The buoyant sentiment sank when economic projections on state revenue were down. That created uncertainty and the drive to repeal the sales tax stalled.

 The math didn’t work out this year. Before the sales tax can be repealed, another source of funding to replace it has to be found. 

 Lawmakers in favor of repealing the sales tax have not been specific on how they would make up the loss of revenue. Certainly, nobody is going to come forward with the unpopular idea of imposing another tax to make up for the sales tax.

 Legislators took cover this session by pointing to funding priorities that they had to cover in the budget. Repealing the sales tax now wouldn’t be prudent.

 It’s estimated that removing the sales tax on groceries, while also repealing the grocery tax credit, would cost the state general fund $79 million annually, according to one estimate.

 The $79 million figure includes spending more than $26 million a year to increase revenue-sharing proceeds to keep cities and counties whole so they don’t lose money from the tax repeal.

 Idaho residents get some of the sale taxes they paid on groceries back in the form of a tax credit on their state income tax. It’s $100 on the tax form, I think.

 The state gets to keep the millions paid every year in sales taxes by out-of-state visitors. Do Idaho lawmakers want to give that up? I don’t think so.

 Speaking of sales taxes, did you know that you owe taxes on anything you purchased online or in another state and brought back to Idaho?

 That’s right. According to the Idaho Tax Commission, you owe Idaho use tax when you buy products in a state where no sales tax is charged, such as Oregon.

 I was unaware of this liability, or hadn’t thought about it, until the tax commission sent me a press release.

 I’m not sure how Idaho tax officials can enforce the sales tax law. The reason some people shop across the border in Ontario is to avoid Idaho sales taxes.   

 Obviously, it’s based on the honor system. There is a box to fill out on your Idaho tax form.

 I could be in trouble if tax officials come after me. I didn’t keep any receipts.

 Steve Lyon is the editor of the Weiser Signal American. Contact him at scoop@signalamerican.com.