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Georgia may put a 4 percent sales tax on groceries

State has exempted food items since 1996

POSTED: March 15, 2011 12:30 a.m.

Publix Supermarket employees Kenny Goss, top, and Mitchell Daniel straighten boxes on the shelves at the Dawsonville Highway grocery store Monday afternoon. Due to tightening budgets in the state of Georgia, a grocery tax may be an option for raising revenue.

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There aren’t many certainties in life, but one thing you can count on is that people will always buy food.

As part of its efforts to overhaul Georgia’s antiquated tax system, the Special Council on Tax Reform and Fairness for Georgians recommended the state begin collecting a 4 percent sales tax on groceries.

Since 1996, food has been exempt from sales tax. But the council believes taxing food would help stabilize the state’s tax revenue.

“Removing this exemption will increase the stability of the sales tax base and eliminate the distortion between the taxation on eating out and eating at home,” the council wrote in its recommendations. “Sales tax on food may be viewed as inherently regressive, meaning that lower income families pay a higher proportion of their income on such taxes. However, in general, exempting certain goods and services for equity reasons is a very crude instrument for reducing the tax burden on low-income families because wealthy families will benefit more from the exemption than low-income families.”

The report cites a Georgia State University Fiscal Research Center study that estimates ending the exemption on food would generate about $472 million in additional sales tax revenues.

The 10-member tax council, appointed during the 2010 legislative session by Gov. Sonny Perdue, Lt. Gov. Casey Cagle and House Speaker David Ralston, was charged with gathering the opinions of Georgians across the state and creating an overhaul of the state’s tax code. It drafted recommendations after six months of public hearings.

“The state of Georgia is trying to shift closer to a consumer tax rather than an income tax,” said Sen. Butch Miller, R-Gainesville. “How do we minimize the tax burden on the citizens? That is by having a lower broader tax system, in effect everyone paying lower tax. We don’t want to burden anyone, we want everyone to pay their fair share.”

The council recommended the sales tax exemption on food for home consumption be eliminated June 30.

Miller said people are divided on the issue of taxing groceries.

“From a consistency standpoint, groceries would provide the biggest stabilities for the tax digest. Auto sales go up, auto sales go down. Furniture sales go up, furniture sales go down. But groceries across the board are the most consistent item upon which to base the tax digest,” Miller said. “The down side is that affects not the discretionary income, but that affects the required expenditures that a family makes. I would really hate to see us taxing groceries because it affects so many families and such a large part of their spending.”

Kathy Kuzava, president of the Georgia Food Industry Association, said her organization, which represents retail and wholesale grocers, is against the recommendation.

“Our customers have expressed concern about the issue of course,” Kuzava said. “And in today’s economy we are concerned about anything that will create additional cost for our customers.”

Kathy Floyd, advocacy director for AARP Georgia, said adding a sales tax on groceries would be very hard on senior citizens.

“For seniors on a fixed income, a big part of their budget is going to be food. When you add a 4 percent state sales tax, it can have an impact,” Floyd said. “Social Security currently is not taxed, so they would be experiencing a rise in taxes with no offset.”


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