Topeka, Kan. — The Governor’s Council on Tax Reform has published its final report, which strongly advocates for an immediate end to the state sales tax on groceries and the restoration of a more diversified and balanced tax base. The Council found that returning to a better balance of sales, income, and property taxes provides more stability for the state budget and increases equity for the state’s taxpayers.
“Kansas is one of only a handful of states that fully taxes groceries, and people have been talking about providing this exemption since the tax was first imposed in 1937,” Council Co-Chair Janis Lee, a former Democratic state senator and member of the Kansas State Board of Tax Appeals, said. “Studies have shown that axing the state food tax would reduce food insecurity, so getting it off the books as of July 1 would be far preferable to some of the proposals that have emerged that would instead dial the rate down over a period of years.”
In its report, the Council tests various policies on hypothetical taxpayers to measure the impact that potential tax changes would have on Kansans. The analysis clearly shows the benefit of Governor Kelly’s “Axe the Food Tax” proposal, which eliminates state sales tax on food as of July 1 and saves the average Kansas family of four an estimated $500 per year.
The recommendation of eliminating the state sales tax on groceries dovetails with the broader strategy the Council advocates regarding balancing sales, income, and property taxes to make Kansas a more attractive place to live and work.
“When state and local sales taxes are combined, our report shows that in some jurisdictions people are paying over 9% in sales taxes,” Donna Ginther, Director of the Institute for Policy & Social Research, and the chief academic advisor to the Tax Council, said. “Sales taxes are regressive, meaning that lower income households pay a higher share of their income in sales taxes.”
“Many of us on the Council are excited about the hypothetical taxpayer model and its potential ongoing use as a tool for policymakers moving forward,” Council Co-Chair Steve Morris, a former Republican Kansas Senate president, said.
Governor Laura Kelly formed the Council on Tax Reform through Executive Order No. 19-11 in September 2019, charging the group with evaluating the overall adequacy and equity of the state and local tax structure. The council included current and former legislators, public and private sector leaders, and Kansas state and local officials.
Donna K. Ginther, Roy A. Roberts Distinguished Professor of Economics and Director of the Institute for Policy & Social Research, served as the chief academic advisor to the council and directed the preparation of the council’s final report with significant support from IPSR staff members.
The Council’s full report can be found here.
